[HN Gopher] How Zillow's homebuying scheme lost $881M ___________________________________________________________________ How Zillow's homebuying scheme lost $881M Author : spansoa Score : 278 points Date : 2022-03-18 16:00 UTC (6 hours ago) (HTM) web link (fullstackeconomics.com) (TXT) w3m dump (fullstackeconomics.com) | noasaservice wrote: | And a solution is exponential taxation for properties not being | lived in by the buyer. | | I'm done and tired of vulture capitalists and all sorts trying to | make bank on where to live. I'm sick of landlords looking for | shitty almost-passive income while I build them equity. | | Fuck'em all. I want this "industry" to die in a pit of firey | death. | devmunchies wrote: | > _Zillow's exit from the market strengthens the position of | companies like Opendoor or Offerpad, which do something similar_ | | Does Opendoor just have better algorithms/models? What factors | allow them to have different outcomes from Zillow? | trixie_ wrote: | This is a good question. I am long on some company figuring out | how to really streamline the home buying/selling process. | Everyone dreads it, nothing worse than trying to buy or sell a | home. These companies could be great buffers allowing the quick | sale/buying of a home with minimal overhead. There is | definitely a market for providing 'peace of mind' and the | guarantee of not being screwed which today there is a high | probability of from all angles. | | Hopefully Opendoor can figure it out. They're probably going to | need a lot of cash, homes, and software to really put it | together into something that can be automated and scale. | philipodonnell wrote: | If I remember the discussion at the time, OpenDoor and Offerpad | are pure-play iBuying while Zillow was an already huge business | pivoting into iBuying to make up for declines in its | advertising business. Zillow had a reason to scale faster than | the others and they didn't do it very well. | bkberry352 wrote: | Mostly that they no longer have to compete with Zillow | 1B05H1N wrote: | How much money did this cost everyone else? | titanomachy wrote: | I think that "everyone else" actually made money from this. | Zillow overpaid for houses and then was forced to sell them for | the actual market value, so this $881M was basically free money | given directly to the people Zillow bought from. | maldeh wrote: | Likely some stressed out buyers paid for overpriced homes given | the sharply rising prices across the market (although | completely by their choice), and the sellers probably loved it | - but that's already par for the course with the housing market | at the moment. Zillow probably didn't help but isn't the sole | contributor by any means. | bernardv wrote: | That's what happens when you get involved in a business you | really know not much about I.e. market-making and risk-taking. | emodendroket wrote: | Guess Zillow didn't have the brilliant insider information as to | what the market would do that everybody thought. | natas wrote: | Based on S4 forms, Zillow execs made a cumulative $1.3B from what | might have been called a ponzi scheme, so it was overall well | played. | mistrial9 wrote: | > so it was overall well played | | in one breath it is overtly and explicitly illegal, second | breath same sentence.. "wellplayed" .. any red flags here? | | I have heard "contemporaneously, during the Fall of Rome, there | was a precipitous rise in the number of lawyers"... | hgomersall wrote: | Why could this not be run as an actual service. Zillow fronts say | 75% of the estimated purchase price, then sells it and takes a | cut of the premium, the rest going to the original seller. It's | an estate agent with financing. | Traster wrote: | Because very often the reason you're selling a house is that | you're buying a house, and so you need 100% of the value of the | sale to go towards your new deposit. It's no good having 75% of | the cash now, you need it all as a deposit and the mortgage | company isn't going to take the risk that that 25% turns up | eventually. | h2odragon wrote: | Zillow's estimates of home values in my area have consistently | been 150% of actual prices, as far as I've seen over the past | years. Not that I've looked that closely and given that this is a | hard area for them with low sales and a broad range of values for | reasons not easy for their algorithms to quantify. | | However, I always took that to be intentional, sort of a "see how | valuable your home is / how high the values are where you're | looking at"; hype that cost them nothing but made everyone feel | better. Did the person that set that "glamor bonus" fudge factor | get fired or just wasn't allowed to talk to the team deciding | offer prices? | some-guy wrote: | Another anecdote: I'm in Oakland, where condo prices went down | slightly during the pandemic overall, yet Zillow's estimates | are always much higher than Redfin's (which seem to be in the | same ballpark as the sale prices). | mistrial9 wrote: | maybe Redfin actually incorporates "price at end of closing" | into their models, instead of say .. "wishful drinking" | prices from Zillow and crew? | civilized wrote: | The Zestimate history for a condo I used to own is hilarious. | There have been several sales of this property over 5 years, | all at about the same price. | | If you follow the Zestimate through time, it climbs rapidly | until there is a sale, then it goes "oh shit" and plummets down | to the sale price, which is barely different from the last time | it was sold. This cycle repeats each time the property is sold. | | Zillow is absolutely certain that this property should be | rapidly increasing in value, no matter how many times it sells | at about the same price it sold for last time. | | When we sold the property, the agent told us it was in an | awkward spot: too expensive for single people, not quite big | enough for high-earning families. So it's stuck in price limbo | as all the neighboring condos skyrocket. | | Based on this experience, I remain convinced that there are | micro-structural factors the fancy data science pricing models | just can't seem to capture yet. | throwaway1777 wrote: | It varies widely by Area how accurate the zestimate is. In some | places Redfin is much higher than Zillow, in others places it's | reversed. Sometimes they're too high, sometimes they're too | low. I presume the algorithm does best when the prices are | fairly flat, but in this market real estate prices changed | dramatically and it seems pretty impossible for an algorithm to | figure it out without modeling the entire economy and movement | patterns of the population. | avgDev wrote: | Odd. My house is valued at $330k on zillow, would sell for | $420K+ in a few days. | brk wrote: | Mine is pretty accurate ($2.5M), based on recent sales and a | couple of solicitations from realtor friends. | | FWIW, we have had a high frequency of home sales in the past | year, so that might help. I just looked up my previous house | (sold 5 years ago), and Zillow is saying $740K, which I am | pretty sure is massively overvalued, however the street it is | on, and general area, have a fairly low turnover, so less | recent data. | syspec wrote: | Humble brag | eyjafjallajokul wrote: | Not if you bought a home a decade or two ago and house | prices went up around you with no action of your own. | | I drive an old Honda Civic and my neighbors all have | Tesla, Porsche, etc. | brk wrote: | I didn't mean it that way, and it's all relative really. | There are a ton of houses above and below my price point. | imilk wrote: | Mine is pretty accurate as well ($44.8M), based on recent | mentions in Architectural Digest and a couple of | solicitations from fellow G650 owners. | micromacrofoot wrote: | It varies a lot based on location and what's sold locally. If | there aren't a lot of similar properties in the area that | have sold recently it will be much less accurate. | nikanj wrote: | How do you _lose_ money investing in homes since 2010 or so? The | market has been going gangbusters everywhere with a zip code, | with solid double-digit gains in all place with more than one | Starbucks | encoderer wrote: | I was at Zillow for many years and left in 2020. On the tech side | the pivot into iBuying was absolutely bonkers. The message from | senior leadership was basically: I have no idea what your teams | should be working on but it's definitely not what they are | currently working on so stop that and figure something else out. | | This has nothing directly to do with their market failure but | they probably are driven by the same leadership problems. | phlowbieuq wrote: | i wish we lived in the same area and could have an OTR | conversation about this. believe it or not, the new "strategy" | now that ZO is all shut down is even less well-defined and more | pie-in-the-sky than ZO ever was. | [deleted] | itronitron wrote: | Sounds familiar, I read this as leadership saying... "you all | need to change what you are doing because you must not know | what you're doing because we don't know what we're doing and | we're the ones in charge." | ourmandave wrote: | I'm planning to sell very soon and love the iBuyer model. | | Don't have to deal with showings, or fix anything, or hope a | buyer's financing doesn't fall through at the last minute. To me | that's worth whatever percent they're getting. | | Sadly, no iBuyer operates in my fly-over state. | JKCalhoun wrote: | Not sure why the article goes to such lengths to legitimize | "Corporate flipping", calling it iBuying or whatever. | | No matter what terminology you use, buyers without cash-in-hand | are getting screwed. | mywittyname wrote: | > No matter what terminology you use, buyers without cash-in- | hand are getting screwed. | | "Cash is king" is a common phrase in real estate for good | reason. In pretty much all instances, a cash buyer has a leg | up over everyone else. In a liquidity crunch, cash buyers get | discounts because people can't get loans; in hot markets, | they get discounts because they can wave contingencies; in | cool markets, they get discounts because they can move | faster; etc. | bduerst wrote: | This hasn't always been the case with real estate though. | The market used to be much more accessible, and tech | bubbles overlapping into it are just further destroying it. | bell-cot wrote: | Reminds me of an old guy in knew back in the early 90's. His | (quite nice) house was on a lot shaped like "well, that was the | leftovers, after we gave all the other houses reasonable lots". | Every year, the City tried to raise his property's assessed value | by ~10% more than the neighborhood's average increase. And every | time that his house sold (he had decades of records, to support | his appeals of their over-assessments), it sold for ~50% of what | the City wanted it to be worth. Now if he could have gotten the | City to buy him out, for what their Assessment rulebook _said_ | his house was worth... | | Edit: Added seemed-obvious final sentence. | sokoloff wrote: | I've often wished that one avenue of appeal of a city | assessment was an option given to the property owner to force | the city to buy the property for 90% of what they assessed it. | You could either go through the current appeals process or just | sell them the house if they were way off. | nikanj wrote: | And the same for the reverse: You can claim your house is | only worth $40k, but then the city is allowed to buy it for | $48k. | sokoloff wrote: | I'd be OK with that, but would probably design it to allow | the homeowner to "fold" and withdraw their petition to | reduce the assessment. (Otherwise, you'd see crap like "Oh, | nikanj's kid is a senior next year; let's jack up their | assessment because they're not going to want to move and so | won't contest it...") | bluGill wrote: | Where I live the assessed value is a complex formula only | somewhat related to real estate values. My house might be say | $500k, but it should assess for about $380k. So I'm losing | long before it would be worth a buyout | bastawhiz wrote: | I recently bought a home. We toured a Zillow home, and I can | understand what they were going for and where they failed. | | We were able to pull up to the driveway, book a tour for that | minute, and walk in the front door. It was almost a magical | experience compared to the process of finding and going to | showings. The listings were clear and thorough. The experience | was extremely compelling. | | The downside: the homes were absurdly overpriced. I bought a home | for about 10% less than the last Zillow listing. For less, I got | three times the land, 40% more square footage, a better location, | updated appliances, new carpets, landscaped back yard, horseshoe | driveway, two car garage. Almost zero effort had been put into | modernizing the Zillow home and it showed. | | I suspect if I had come in with a very low offer, they'd have | accepted it. But for what? | | If I was Zillow, I'd have licensed the tech to realtors. I'd | definitely be inclined to buy a home through them if they weren't | the ones selling the property directly. | wcfields wrote: | If I can give any home buying tip from my experience of buying | two houses it's been to look at places that are in "the | middle". Both homes I've bought in SoCal have had some god- | awful photos online, and the finish is new-ish, but done by | someone in the 70s so it's new but tacky in a little-old-lady | way. | | This ends up pricing the house too expensive to flippers, and | not nice enough to sell compared to other houses because it | doesn't have the farmhouse sink and looks exactly like a | grandma took out a home equity line and renovated (which is | what happened). | [deleted] | escapedmoose wrote: | We took the same approach with our house, and the results | were marvelous. Major props to our realtor for seeing the | potential hidden in those god-awful listing photos. | hammock wrote: | Sounds nice. Where do you live? | TomVDB wrote: | I'm surprised you have an issue with arranging visits to open | houses? | | Open RedFin, check the houses for sale, go to the open house | when there is one? That's at least how it works in the Bay | Area. We never had to schedule or book anything, and only after | seeing a house we liked, we asked our agent to check it out and | submit an offer. | judge2020 wrote: | > The downside | | If this wasn't another house in the same neighborhood then the | differentiator most certainly wasn't Zillow or their pricing. | dlp211 wrote: | Why is this being downvoted. It's completely correct. The | value of a home purchase is not just the building, but the | land it sits on. | | OP got a bigger, more modern house, with a larger yard for | less, but it's meaningless until we understand the market | circumstances of both homes for sale. | | It could be that Zillow is overpriced here, or it could be | that Zillow is properly priced, we have no idea from the | information provided here. | ipaddr wrote: | You missed better location | dlp211 wrote: | Better location is a completely subjective statement. | Show me the comps. | polski-g wrote: | Zillow prices my house 100k higher than redfin | awb wrote: | > the homes were absurdly overpriced | | That's saying a lot for a red hot real estate market. | | I still get updates from Zillow every month saying my home | increased 5% in value in the last 30 days and up 30% over the | last 12 months. Something is wildly off with their algorithm. | CloudYeller wrote: | I bet humans could have done a lot better than -$881M, and it | wouldn't have been very costly to employ them. How many homes did | Zillow iBuy in total, 10-20k? If it takes 5 minutes to evaluate a | house, that would be 100,000 minutes, which is ~50 people working | full time for a week. Spending $100k on that could have saved | 100s of millions, plus it might have generated better training | data for the model. | antidnan wrote: | Has anyone seen an analysis of why their pricing models were | above market, and/or worse than OpenDoor? | ccorda wrote: | Mike DelPrete has done several: | | - https://www.mikedp.com/articles/2021/12/16/opendoor-vs- | zillo... | | - https://www.mikedp.com/articles/2021/11/3/zillow-exits- | ibuyi... | endisneigh wrote: | They should've set it up so you can be sent a set of cameras to | put across your house, they photograph and setup a smart lock, | etc. | | In return people would be able t book a viewing to your house | without a buyers agent nor would a sellers agent be involved. Cut | both parties out, pass some savings to the buyer and seller and | take a large cut. | | Everyone wins. | asdff wrote: | Who do you talk to about the listing in this case? | mistrial9 wrote: | I am especially annoyed at Zillow SF holding "Data Science" | meetups in San Francisco at the penthouse place, while | advertising for TWO data science positions.. meanwhile, frat guys | are at the golf course by the dozens, across three states. The | people that they hired at that time, probably built this setup | exactly as _required_ by the frat guys. Happy banking Zillow! | mwt wrote: | There's some poetry in older banks claiming they're pivoting to | being tech companies (i.e. Capital One) while some tech | companies are heading straight towards being banks. | sjroot wrote: | Former C1 employee here with a personal opinion. C1 is | walking the walk; everyone up to the CEO is very tech-forward | (which quite surprised me initially) | JRKrause wrote: | Zillow purchased a home in my neighborhood for $370K, is now | trying to sell it for $410K. Prior to this purchase other houses | with a larger footprint in our exact same neighborhood were | selling for $250K(literally just months before). For some reason | zillow chose to pay 100K over what would have been fair value for | the house. | annoyingnoob wrote: | The Zillow properties in my area were all overpriced, they were | paying too much. People were happy to sell to Zillow at a | premium. | skrtskrt wrote: | Some twitter threads from Zillow insiders I saw around this | referenced a couple things: | | * the pricing algorithm was good, but the business leadership got | hungry and kept overriding it with higher offers in the hunger to | do more business. | | * they were trying to do so much business that they couldn't | source the labor need to flip - painting, landscaping etc. They | were so backlogged they were just sitting on houses they overpaid | for (due to overriding the algorithm), and the constant cashflow | aspect that makes flipping work at scale was destroyed | | Matt Levine's take was something like: | | if the pricing algorithm is good but it tells you that the flip | strategy is only profitable on relatively small number of | properties, then it's not profitable at scale cuz you're paying a | big engineering team to create, tune and maintain it. | thr0wawayf00 wrote: | The scary thing is that it's easy to see how something how like | this could drive a market boom and bust cycle. I'm imagining a | scenario where two iBuyer companies try to outbid each other | algorithmically, driving the prices further and further out of | reach of people who are looking for a primary home. | | Tangentially related, I talked to a friend who works on | geospatial data for one of the big vacation rental companies, and | he was remarking how many homes in many desirable areas are now | rentals. It's not that uncommon to see nearly entire | neighborhoods converted to short term rentals now in some areas | where they're still legal. Hearing that really depressed me. | | We often talk about automation in terms of replacing various | types of labor, but I've become really interested in automation | creating adverse market incentives for smaller market | participants because that's exactly what buying real estate right | now feels like. | | It's honestly quite scary how I'm in the top 2% of income earners | in my generation and yet I could barely afford to buy a small | place in a semi-desirable area. I can easily see myself not being | able to compete in algorithmically dominated markets flush with | venture cash in the future and I earn more than just about | everybody I know today. | cyberpunk wrote: | Yep. You should see the situation in beautiful yet remote | places like the Isle of Skye in Scotland or the Outer Hebrides. | If you have some land, it's a no brainer to build a holiday | rental. A pre-fab will cost you maybe 120k (after the land) and | it's k/week or more during peak season to rent it out. | | Of course, it means prices are going insane. A complete wreck | of a house we were interested in buying and turning into an | actual home which I thought would be worth max 200k went for | 450, cash, from a buyer who never even saw it. | | They'll tear it down, stick a new house on it, and make their | investment back in 5 years. | | Meanwhile, all the locals kids, go away and don't come back. | What is there for them there anymore? Not a lot. | ddoolin wrote: | The problem here is that they were buying the homes at prices | above what they would actually sell for to real buyers and | Zillow ended up racking up losses in that way. In your scenario | in which two iBuyers outbid each other -- fine, but wouldn't | the same situation as Zillow's happen? They'd just end up with | overpaid inventory. | mwt wrote: | Whether or not the market works itself out later, it puts | everything into a weird state while the bidding war is going | on. If iBuyer1 and iBuyer2 together buy up the inventory of a | zip code for 120% of asking, then what are people who are | willing to go to 105% to do? Maybe it just resets the market | to whatever the drunken algorithm decided it to be. | sokoloff wrote: | Buy in one of the surrounding zip codes? Wait out the | idiots? | mwt wrote: | In a housing bubble, hopping a zip code over isn't always | possible. | | One can always wait out the market. You could tell me to | simply wait for the next housing crash to buy up | property, but until that happens, it's not an option. | | The whole observation the other person made | | > automation creating adverse market incentives for | smaller market participants | | matters not just in the long-term state but while the | adverse conditions exist. | 999900000999 wrote: | Honest to God, the founders of Airbnb should have been sent to | prison. | | That would have fixed much of this, it's point blank illegal to | run a bed and breakfast out of your home. Now if you're my | buddy, and you want to slide me $200 to crash at my house for a | week that's fine, but if you add technology to it, it ends up | destroying entire neighborhoods. | | Ride-sharing is a bit different, since I'd argue the reduction | in drunk driving deaths more than outweigh any negative side | effects. It's amazingly easy to just call an Uber when you've | had one too many. Countless lives have been saved already. | cuteboy19 wrote: | > That would have fixed much of this, it's point blank | illegal to run a bed and breakfast out of your home. | | Why? It's your home, you can do anything in it. Why should | you need a license to rent out your own home for a few days? | Does it physically destroy neighborhoods or just your | perception of it? If so, why should anyone care? | JustLurking2022 wrote: | Last summer in the midst of the pandemic, someone AirBnB'd | an empty house a few streets over from us to throw a giant | party. I know this because I could hear the music as though | I were in a night club from my back yard. There were also | cats with out of state plates parked all over the place. | Our town is generally fairly lax on laws like noise | restrictions, maybe because it's never been an issue and | avoids involving the police in squabbles amongst neighbors, | so apparently it was legal. Anyway, it was of no benefit to | anyone who actually lived in town and a major PITA for | everyone living in the surrounding blocks, so I can easily | see how residents might choose to outlaw such rentals. | humanwhosits wrote: | > If so, why should anyone care? | | It's not about 'why' care, it's about the fact that they | already do care enough to have caused regulation. | ramesh31 wrote: | >Does it physically destroy neighborhoods or just your | perception of it? | | Yes, it does. People buy homes for more than financial | reasons. Living in a community of homeowners with neighbors | you've known for years is a completely different experience | than living in a revolving door community of renters. | There's been a whole decade of news reports about Airbnb | ruining neighborhoods and condo buildings, to the point | that it's not even worth citing a particular incident. | cuteboy19 wrote: | So we should criminalize perfectly harmless things | because it ruins your experience? It doesn't seem logical | mym1990 wrote: | It can't be perfectly harmless if it is ruining someone's | experience. Its kind of like urinating in public...maybe | it doesn't hurt anyone but it sure does ruin a lot of | people's experience...and thus it is criminalized. | cma wrote: | Isn't this like saying Walt Disney World shouldn't be | able to sell tickets to out-of-staters? State residents | who know each other could have a higher chance of running | into each other at the park if it wasnt full of out-of- | staters, and that could build valuable community. | PaulDavisThe1st wrote: | I think it is fine to argue that the current rules about | what you can and cannot do within a particular zoning | classification are wrong. In the sense that so much US | zoning eliminates retail from residential, I would make | that argument myself. | | However, there _are_ actual rules, the rules exist for a | mixture of good and bad reasons, and it has never been true | to say "It's your home, you can do anything in it.". | itsoktocry wrote: | > _Why? It 's your home, you can do anything in it._ | | No, you aren't free to do "anything" in your home, | including provide commercial services if not properly zoned | and insured. | | > _Why should you need a license to rent out your own home | for a few days?_ | | This is not what's happening in many places. AirBnB went | from "a place to crash" to an amateur hotelier platform. | mywittyname wrote: | Because it's the law. Whether or not you agree with the law | is irrelevant. | cuteboy19 wrote: | I think most of the answers to my question repeat this | assertion, without really answering the "why?" part. | | If you are a legalist, a loophole in the law is the law | as well. So yes, whether or not you agree with the | loophole is irrelevant | rdtwo wrote: | The law only applies to poor people. Rich people can and | do ignore laws all the time. When corporations get | involved they can just bully around all the local | municipalities with size | 88913527 wrote: | Might as well eschew all zoning laws and turn your home | into a junkyard or a industrial manufacturing facility by | the same rationale: it is your home, after all. | kuboble wrote: | It's because whatever you do in your house is affecting | everyone around it. So you making little extra money is | taking value away from everyone else in your neighborhood. | The fact that you don't know anymore everyone in your block | is hugely affecting safety and let alone extremes like your | airbnb guests getting loud, throwing trash around, making | parties etc. | | In my area we have a legal agreement between all apartment | owners that things like this are not accepted. | 999900000999 wrote: | Let's take this to the extreme, do you think you have a | right to set up a commercial kitchen in your home, and set | up patio furniture for random people to show up and order | take out? | | Don't you see an issue of every single person decides to do | this in your neighborhood, traffic being the first thing. | | The other issue too, is most people are renting out | apartments, and then Airbnbing them. Like, at that point | it's not your property, you're just granted temporary | permission to use it. Likewise, most condo boards don't | want you to use your property as an Airbnb. | BirdieNZ wrote: | > Let's take this to the extreme, do you think you have a | right to set up a commercial kitchen in your home, and | set up patio furniture for random people to show up and | order take out? | | You can do this in Japan. Why shouldn't you be able to do | this? | 999900000999 wrote: | Japan doesn't have nearly as many cars per capita. | | Regards you can't just ignore zoning laws because you | feel like it. | BirdieNZ wrote: | We could change the zoning laws so that it isn't illegal, | though. | | One of the ways you can reduce cars is by zoning to allow | greater density, which enables forms of transit which are | more space-efficient than cars are. It's a chicken and | egg problem, but people will be crying out for better | cycle ways and trains and buses if housing becomes more | dense. | | Also, having commercial spread throughout residential | areas reduces the amount of travel between areas, because | you don't need to go far to get to the amenities you | want. | cuteboy19 wrote: | > set up a commercial kitchen in your home, and set up | patio furniture for random people to show up and order | take out? | | This already happens in my country. It's a great way to | support entrepreneurship and small businesses. I can't | imagine how authoritarian the country must be to | criminalize this. Are you living in North Korea or Cuba | by any chance | pvarangot wrote: | > Why? It's your home, you can do anything in it | | You kinda can, but you don't get the type of legal | protections a hotel or B&B that plays by the rules has. | | Also like it's your home, but it's not your roads, cops, | firemen, sewage system, power grid, courts... you wanna use | all those services you have to play by their rules and | there's a lot of rules and they don't exactly make a lot of | sense. | pfisherman wrote: | How would you feel if I paid your next door neighbor to | store radioactive waste in their yard? What if I paid them | to demolish their home and put up a giant flashing | billboard facing your bedroom window? | | Do you think it would impact the value of you property? Do | you think that would be fair? | | People care because it is a matter of justice, which is one | of the fundamental precepts of society. | javert wrote: | It's because US monetary policy has created an enormous | transfer of wealth to the wealthy and out of the general | economy. They do this by extending credit at low interest rates | with the collective understanding that the value of the dollar | will continue to be printed away. The wealthy (like me...) buy | stuff on credit now and pay it back later with much cheaper | future dollars. | | COVID threw a wrench in the scheme temporarily and caused a lot | of that money to start trickling down, which is why we're | seeing wages rise rapidly and high consumer-level inflation. | | By the way, bitcoin fixes this. | notahacker wrote: | Ah yes, nothing says egalitarianism quite like the | distribution of Bitcoin. Why allow one percenters to borrow | money they actually have to reinvest in giving people jobs | when we can just give them the printing press? | colinmhayes wrote: | Monetary policy and fiat currency are unequivocally good | things. Deflation is what caused the 50 year recession from | 1860-1910. Not being able to control inflation leads to mass | unemployment. | javert wrote: | My comment explains in detail the specific mechanism I'm | concerned about in a way that everyone can understand it. | Your comment regurgitates something from a textbook that | people have on reason to actually trust. I don't have a | problem that you disagree with me. I have a problem that | it's an argument from authority. | | Also, I wonder if you're conceding that the Fed steals from | the economy in general and gives to the super wealthy, and | simply think that that's a necessary side effect of having | a well-functioning economy. It seems like it. | colinmhayes wrote: | Bitcoin is not a viable currency. It's value is not | anywhere near stable enough. It's honestly incredible | that you haven't even thought of the very first problem | with using bitcoin as a currency. Yes, the rich abuse the | current system. They will do the same with any system. | Saying "we shouldn't ensure that our currency has | predictable value because that would make the rich even | richer" is insane when the rich will be richer no matter | what you do. | | > I have a problem that it's an argument from authority. | | https://danluu.com/cocktail-ideas/ you are the developer | who thinks building a bridge is easy. Please just admit | that you don't understand what you're talking about. | javert wrote: | > Bitcoin is not a viable currency. It's value is not | anywhere near stable enough. | | It can't go from zero to stable overnight. It has to | start somewhere and gain stability over a long period of | time. | | > It's honestly incredible that you haven't even thought | of the very first problem with using bitcoin as a | currency. | | You're behaving like a troll. There is an absolutely | obvious objection to your prior sentence, but rather than | see that, you pretend like it isn't the case, and attack | me personally. You don't know me and you don't know my | thinking. | | You're also behaving as a troll because you've totally | changed the topic instead of answering my direct | objections to your prior comments. | | I'm done talking to you. I assume your next comment will | also be trollish, and I hope people see through it. But | please just don't answer. | ipaddr wrote: | Wealth and power get transferred over to the blockchain. | You end up with the same structures in a less | controllable currency. | closeparen wrote: | iBuyers are supposed to be playing a rational strategy over a | large portfolio; they pay what they think the house is worth, | and unlike an irrational/emotional human who _really wants_ | that property for his primary home, they have no reason to | participate in bidding wars past what they think the house is | worth. The the point of the iBuyer is to turn around and unload | it after a few weeks or months on someone who wants it for a | primary residence; it 's not in their interest to pay more than | such a buyer can afford. | | People are living longer and tolerating less construction. | We're only building or freeing up enough homes in desirable | areas to skim the very top of our generation. | cheriot wrote: | > The scary thing is that it's easy to see how something how | like this could drive a market boom and bust cycle. | | iBuyers don't buy from each other or hold the house for long. | As soon as they sell then everyone sees what a market price | looks like without them. | | > automation creating adverse market incentives | | You seem interested in how markets drive outcomes so I'd | suggest looking into the effects of residential zoning and | other barriers to construction. The US has spent the last 50 | years coming up with creative excuses to prohibit new housing | and it gets more expensive every year. Probably related! | | Not the best example, but one I have handy: | https://twitter.com/DurhamFella/status/1441808710066577410?s... | rank0 wrote: | I think people should expand what "desirable" means to them. | There's a ton of suitable houses all over the country. Everyone | seems to need to own a SFH in a trendy part of a trendy city. | alistairSH wrote: | "All over the country" doesn't have good jobs, good schools, | access to entertainment, etc. | | But, I agree on the SFH part. The expectation that a 3000sqft | house on 1/4 acre is the norm is completely unsustainable. | Yet that seems to be what many people want. Even in high COL | areas where demand and cost should be driving density. | rank0 wrote: | There are absolutely good jobs in every city in America. | Entertainment can mean anything...and frankly people should | be able to find fun things to do on their own without | needing bars, nightclubs, concert venues, etc. | | I concede that good schools are a major barrier. I'm young | and won't be having children anytime soon so I don't think | about it much. | | Where I live, the public schools are pretty rough. It's | cheaper to stay here and send your kids to private school | rather than move to a family dominated neighborhood with | excellent public schools. | alistairSH wrote: | Every city, sure, but cities are expensive. Even cities | that used to be affordable, like Portland and Austin. But | between the cities? Not much. Some small towns might work | if you're the town lawyer or MD, but a town can only | support so many of those. And if you're an engineer or | banker? Not much employment. | rank0 wrote: | Portland and Austin are the very essence of "trendy city" | those places are very expensive. I'm not arguing that | people move to small towns. There are hundreds of cities | in the US with 100,000+ populations (not even including | the metro areas). The idea that each of these cities is | unaffordable and without a job market is just wrong. | | Everyone wants to live in NYC, SF, DC, Miami...etc | because the other areas aren't cool enough for them. | boring_twenties wrote: | Not for long. Salt Lake City was one such city just 3-5 | years ago. Now everything has doubled and it's almost as | expensive as the trendier cities, without the higher- | paying jobs. | notreallyserio wrote: | Well, you should just lower your standards when it comes | to picking a job, too. Maybe you could be a grocery clerk | or a gas station attendant? | sokoloff wrote: | Of course that's what people _want_. Because it beats the | pants off a 1100 ft^2 condo or apartment with no private | yard and shared walls /floors/ceilings in almost every | regard of daily, lived experience. | | I totally get why people want that; what I don't get is why | they can't understand that so many other people also want | it that most everyone will have to compromise on some | aspect. | kevingadd wrote: | Are there jobs near those houses? Specialist doctors? Good | schools? | | I WFH so I could probably buy one of those houses, but most | of my friends in my age bracket are expected to show up to an | office 5 days a week, so those suitable houses are no good | for them. | rank0 wrote: | Yeah those are good points. I live in a bit of a bubble | where most folks around me either WFH or have to travel to | work. There are absolutely "specialist doctors" in every | large city though... | kevingadd wrote: | You might be surprised how hard it is to _actually_ find | specialists, even in big cities. In the SF bay area for | example for a couple different procedures I had done in | the last decade there were perhaps 3 specialists in the | whole area who could do it, far enough from me that I had | to book a hotel room to stay in closer to the facility | and avoid 4+ hours of driving. | | A family friend was diagnosed with a difficult brain | tumor, and to get it removed via a (if memory serves, | this was a while ago) gamma knife procedure, he had to | drive 6+ hours north from a relatively large mid- | california city up to Sacramento because we had one of | the only facilities equipped for it there at the time. | | In general people often will get transported to other | hospitals for treatment, often multiple hours or even | across state lines. Now imagine that you have to do this | multiple times a month because you moved to a less-urban | area due to housing prices... | giraffe_lady wrote: | Is my family there? My church? The park where I learned | to play soccer? My daughter's best friend? | | When you sit around talking about choice of living area | without weighing, or even _acknowledging_ these | connections, do you realize how inhuman this sounds? Do | you not have similar things binding you to a place? | | Shit even specialist doctors, have you ever depended on | one? If you're needing long-term specialist care you got | some major shit to deal with. Rapport, trust, history | with an individual doctor is an important part of that | care. And people need care aside from just the doctors. | Who is driving you to these appointments, caring for you | afterwards? Are they coming to the new city with you? | | There are a lot of _things_ in a place you know. You can | 't reduce all or really very many of them down to mere | transactions in a marketplace. | rank0 wrote: | I feel you. It's horrible if you've grown up somewhere | and suddenly can't afford a home in the same spot. | | But life's unfair. Houses get sold to the highest bidder. | This is what happens when everyone wants to live in the | same areas. I'm not arguing that you SHOULDNT be able to | afford a home in your preferred spot. I'm observing that | it's IMPOSSIBLE for everyone to own property in their | preferred spot within their budget. | | You can still rent, or buy cheaper homes in cheaper areas | in your city. | | We can't just will affordable housing into existence when | ~97% of people live on ~3% of the land. | ipaddr wrote: | If you work from home you go to good remote schools and see | the best doctors remotely. | jrvarela56 wrote: | +1 GP is top 2% of their generation but not necessarily top | 2% of the area they're looking into. Sounds fairer when put | that way. | civilized wrote: | Yes. The problem is: | | 1. A lot of high earners want to cram into a small space | | 2. The existing high earners living in that space don't | want to allow more built in that space because they like | the neighborhood how it is | | So all these high earners compete against each other, and | houses become as expensive the winning high-earning bidders | can afford. | | For this to stop happening, #1 or #2 needs to stop. So, | either the high earners need to stop cramming into a small | space, or policy must be changed so the locals can't stop | the growth of housing supply. | | (Usually when I've pointed this out in the past, I get | mobbed by NIMBYs who insist that growing the housing supply | will somehow cause prices to skyrocket even more. There | seems to be a widespread NIMBY belief that standard | economics doesn't apply to housing, for mysterious reasons | that no one ever quite gets around to explaining. It'll be | interesting to see if it happens again today.) | BirdieNZ wrote: | Per-unit rent will go down if you increase supply of | housing, but the value of the land underneath will go up | if you increase the amount of houses allowed to be built | on said land. There's one part of "standard economics" | that a lot of people forget with property, which is that | land in desirable locations is of limited supply and you | cannot increase its supply. | | Land at the boundaries of a city is not equivalent with | land in the centre, because of location value. | | I do agree that #2 should stop, but be warned that it | doesn't solve land values going sky-high; it actually | increases land values. The solution is land value tax, a | la Henry George. | ipaddr wrote: | It can happen because new homes are more expensive. | People prefer new and will pay more. That raises the | average price which raises prices on the existing supply. | civilized wrote: | Or it lowers price on the existing supply because | wealthier buyers are going to the new supply now rather | than bidding up the existing supply. | t-writescode wrote: | Not me. I just want mixed residential housing. Yeah, it's not | happening because America made that effectively illegal. | We're finally rolling some of that back, but it's going to | take decades to undo and by that time the shortage will | continue. | rank0 wrote: | Sorry man that sucks. I own a property that's effectively a | duplex in Atlanta. My buddy owns a duplex in Denver. It's | not everywhere that mixed residential homes are banned! | | Are you in CA? | not2b wrote: | In California, there's currently a fight between the | state government, which wants cities to allow more | housing, and local governments, which are opposed to | higher density housing because the NIMBYs ("not in my | back yard") fight it. The restrictive zoning laws are at | the local level, not the state level. | PaulDavisThe1st wrote: | > The restrictive zoning laws are at the local level, not | the state level. | | True, but the restrictive zoning laws are made possible | at the state level. | | A thread here on HN a few weeks ago mentioned Japan which | they described as having basically 5 classifications for | "types of things you can do on land you own", ranging | from "essentially anything at all" to "notable | limitations". Within whatever classification your land is | given, you can do whatever you want, local neighborhood | be damned. | | I don't know if that's an accurate description, but it | sounds like a system with a very different set of | tradeoffs than the one found across the USA. | InitialLastName wrote: | Normally when people talk about mixed-use development, | they are talking about zoning rules that allow | residential and commercial use in close proximity, not | necessarily about forced single-family use (although that | is also an issue in many places). | rank0 wrote: | Ah I see I misunderstood. FWIW though there's businesses | scattered all over my neighborhood and seemingly no | zoning rules. Lots of folks, especially the ones on this | forum, would probably not live in Atlanta simply because | of their perception of the city. | InitialLastName wrote: | Atlanta has the advantage of being an old city, relative | to the US's history of development. It certainly has its | own issues with post-WWII development (especially in its | sprawly areas), but the older parts have retained lots of | the perks of pre-automobile urbanization. | [deleted] | janj wrote: | I don't understand this comment, maybe you can expand. It | makes sense to me that what is desirable for a primary | residence would significantly overlap with what is desirable | for rental, comfortable space, walkable to a city center, | etc. Is your point that people should be more accommodating | to the rental market? IMHO I think all cities should strongly | regulate what can be a rental and add tax to homes when it is | not occupied, prioritizing affordable permanent residence. | This isn't just a "trendy city" problem, it's wide spread | across the country. | rank0 wrote: | I'm arguing that people should lower their standards. It | should be easy to understand that not everyone can afford | own property walking distance to the city center. | | I fully agree with you on prioritizing primary residence. | ipaddr wrote: | Everyone can with smaller cities. Living in a megacity | and expecting it is the problem. | janj wrote: | How big of a city are you talking about? I live in a city | of just over 50k and house prices have been an issue for | years and keeps getting worse. It's the same for every | "city" around this size that I've looked into. I've seen | a town with <20k where house prices have more than | doubled in the past 2 years. It's a bold statement to say | everyone can afford to own a desirable home in even a | smaller city. | lordnacho wrote: | This has perplexed me as well. Here in the UK, the top 1% of | incomes is PS175K. Assuming the bank lets you borrow 5x, and | you're married to someone with a more middling income, you can | borrow ~PS1M. | | Yet there's a ring around London where it's hard to see any | family homes that are under PS1M. | | I mean sure maybe they're sitting on equity or mom and dad are | contributing, but by my estimation there are a huge number of | people who have thrown absolutely everything into owning a | home. We'll see how they fare if rates rise. | newaccount74 wrote: | > there are a huge number of people who have thrown | absolutely everything into owning a home | | I don't know what the situation is like in the UK, but here | in Austria banks are really really eager to give people as | much money as they'll take. | | Getting a mortage that runs 30 years? Sure thing! Why not | make it 35 years? 60% of your paycheck goes into mortage? Why | not? You have less than 10% of the required amount in cash? | Who cares! | | The people who are buying homes right now are getting into | massive debt, with variable interest rates. If interest rates | rise, a lot of home owners won't be able to pay their | mortages anymore, and they won't be able to sell because the | only reason people can afford these crazy mortages is because | the interest rates are so low. It looks like a bubble to me, | and the only thing that's redeeming to me is that everyone | has an interest in keeping the bubble going. | sokoloff wrote: | What's the top 3% of income of people _who work in London_? | It 's probably not "all of the UK" that matters as an income | reference, but rather the people who are earning incomes and | wanting to live in that area (plus all the people from around | the world who would consider buying a house in/near London, | but not 100 miles away from London). | lordnacho wrote: | Yeah true, couldn't find London specific stats. Fair guess | is that the lions share of UK to earners are based in | London. | twic wrote: | > there's a ring around London where it's hard to see any | family homes that are under PS1M | | If you mean the Stockbroker Belt [1], well, yes. | | [1] https://en.wikipedia.org/wiki/Stockbroker_Belt | eli wrote: | What's the top 1% for net worth though? | pharmakom wrote: | The problem is it is becoming impossible to be self made. | Most people buying real estate in south east of UK and | London have middling salaries but substantial help from | their parents. The working class kid who made it to | 70k/year? Tough luck. | ipaddr wrote: | People already made their money in London. Buying a home | there means buying into an expensive mature area. Most | people buying come from old money or they are over | leveraged or foreign sources. | | You should try to make some other city into something and | buy into their future price increases. | PaulDavisThe1st wrote: | Hence the absurd govt-backed "buy-and-rent-to-buy" schemes | that the UK has seen showing up over the last decade. | searchableguy wrote: | London is one of the most popular places for people to | whitewash their money via real estate. | | It doesn't seem surprising. | conanbatt wrote: | > rther and further out of reach of people who are looking for | a primary home. | | This happens to all assets all the time. When it rains, | umbrellas go up in price. Companies competing with this and | failing is only a transfer of wealth between VC's and | homeowners. You don't need to ascribe a moral sentiment to that | transfer, its just what it is. | | If the prices then bust afterward, then homeowners that sold | won, the ones that stayed didnt take advantage of the | opportunity, and home buyers lost at the high and will win at | the bottom. Like in any other price fluctuation! | bufferoverflow wrote: | It's "easy to see" if you don't do any math. US real estate | market is around ~$200 billion. That $0.881 billion of zillow | is a rounding error. | haroldp wrote: | > I'm imagining a scenario where two iBuyer companies try to | outbid each other algorithmically, driving the prices further | and further out of reach of people who are looking for a | primary home. | | But iBuyers are always low-balling. They are bidding under the | asking price with an all-cash offer that they hope will make up | in speed and ease what it lacks in price. | | > It's not that uncommon to see nearly entire neighborhoods | converted to short term rentals now in some areas where they're | still legal. Hearing that really depressed me. | | I lived in Lake Tahoe for ten years before AirBnB was a thing | and three out of four homes there were absentee owners that | only used them a few weeks a year. It made it a very hard place | for small businesses to stay afloat. Most visitors stayed at | big hotels or paid huge premiums for ad hoc "cabin rentals" | through local realtors. The most depressing part was Halloween | - kids hiking up and down steep hills to mostly empty houses. | :) | pixl97 wrote: | >But iBuyers are always low-balling. They are bidding under | the asking price with an all-cash offer that they hope will | make up in speed and ease what it lacks in price. | | But is asking price "market" price. As in does the seller | price a 10-20% premium calculating this. Always easier to | negotiate down than up. | uncomputation wrote: | > iBuyers are always low-balling | | Low-balling according to their _own estimate_ (Zestimate) | with imperfect knowledge. If this Zestimate overvalues a | house, but the iBuyers assume "we are low-balling anyways," | they may find themselves in an iBidding war ending in the | winner's curse: whoever pays the most for the overvalued | house wins. | | Not a problem though right? They overvalue some, undervalue | others, it evens out. But, as the article points out, the | nature of this algorithmic buying is that the iBuyers will | only - or at least predominantly - end up with the houses | they overpaid for or got only a slightly good deal on because | many sellers will be willing to take longer for a better | deal. The end result is very thin margins or, as seen with | Zillow, substantial losses as they hold a lot of lemons. | not2b wrote: | Yes, that's exactly it. The "Zestimate" is often way off, | and the owner knows a lot more about it than Zillow does. | If the Zestimate price is lower than the buyer thinks they | can get, they won't take the offer. If the Zestimate price | ignores the run-down condition of the house or other issues | Zillow missed, they snap that up. So Zillow mostly wound up | with the homes that they overvalued. | duck wrote: | Are you saying AirBnB fixed all this? I don't see them | renting much in late October nor passing out candy. | pigscantfly wrote: | No, they're saying the problem existed before AirBnB. | pge wrote: | Zillow wasn't pursuing the strategy of a traditional iBuyer, | which as you note is to lowball. Zillow thought they were | providing a service of market-making and didn't consider the | risks (I still don't see why it wasn't obvious to them...). | If they offered some discount from the Zestimate, that would | have been a lot smarter, but it would have undermined their | goal of making a market, as well as undermining the very | concept of the Zestimate (if Zillow says my house is worth X, | why are they offering me 80% of X?). The alternative would be | to appraise each house in person instead of basing the | purchase price on the Zestimate, but that wouldn't scale. | colordrops wrote: | Sounds like a good sci-fi story... Rebellion against the AI | landlords. | Aunche wrote: | We need a land value tax or at the very least higher property | taxes. That would disincentivize people from speculating into | housing. It's no surprise that cities with the highest home | prices have some of the lowest effective property tax rates. | a1pulley wrote: | > It's honestly quite scary how I'm in the top 2% of income | earners in my generation and yet I could barely afford to buy a | small place in a semi-desirable area. I can easily see myself | not being able to compete in algorithmically dominated markets | flush with venture cash in the future and I earn more than just | about everybody I know today. | | A thought exercise: suppose that no new houses are ever built | and that housing turnover is nearly zero. What happens to the | price of housing in that limit? Market forces do not | necessarily entitle the top n% of the income distribution to | housing. | | I was a bit cynical about this too: I live in Los Angeles, | where a "small place in semi-desirable area" gets listed for | 1.5M and goes for nearly 2M. I'm somewhere in the top 5% of | earners in California, but that $2M 1950s tract housing would | be >50% of my post-tax income. | lotsofpulp wrote: | > What happens to the price of housing in that limit? | | The price continues to reflect the supply and demand of the | houses. You're either lucky to inherit the land, or you earn | enough to outbid others for it. It might even be impossible | to outbid those who are bringing inherited wealth to the | table. | | It might become a transient community, where you work and | save and then leave to settle somewhere else. | tshaddox wrote: | > A thought exercise: suppose that no new houses are ever | built and that housing turnover is nearly zero. What happens | to the price of housing in that limit? Market forces do not | necessarily entitle the top n% of the income distribution to | housing. | | I don't think it's disturbing because "clearly the top 2% of | income earners should be entitled to housing," but because | _clearly everyone needs housing, and if the top 2% of earners | can 't even afford it, that means it's even worse for | everyone else_. | a1pulley wrote: | Owning and having are not the same thing: you can have | housing while renting it, receiving it as a gift from | parents or your spouse, etc. | thebean11 wrote: | > suppose that no new houses are ever built | | Why would you suppose that? I don't really see what you're | getting at, that's a very unintuitive assumption; it | shouldn't happen if market forces are allowed to run their | course. | kevin_thibedeau wrote: | New _afordable_ housing isn 't built. Everything is | "luxury" so that developers can maximize profit. When | someone tries to build affordable duplexes the NIMBYs say | not in my town. | el-salvador wrote: | One trick they use in my country is adding a pool to | apartment buildings. | | The pools are unused most of the time, but having a pool | in the building increases the value estimated by property | appraisals' checklists. | sokoloff wrote: | Even luxury units add supply to the middle and affordable | parts of the housing stock. Today's luxury units are | often bought and moved into by someone moving up from a | mid-market place, the buyer of which is likely moving up | from a 25 year old now affordable place. | | (Alternately, if no luxury unit is built, many of those | buyers will be forced to buy the best-of-the-rest if they | want to move in, putting more pressure on the middle, | which in turn puts pressure on the affordable.) | [deleted] | ffwszgf wrote: | Isn't luxury the only thing that's even allowed to be | built in most NIMBY cities? Try building large "market- | rate" housing in Palo Alto and see what happens (even | within the confines of their already ridiculous zoning | laws). | mywittyname wrote: | It's luxury almost everywhere. | | The only place cheaper housing is being built are in | developments on the far outer suburbs of flyover cities. | But even those builders are having trouble with supplies | and labor. | mirntyfirty wrote: | I think many things are intentionally mislabeled as | "luxury". One can buy a simple refrigerator from Best Buy | and claim that it's stainless. I've seen listings brag | about how the place has a Nest thermostat. | a1pulley wrote: | I was trying to draw attention to the fact that "I'm in the | top 2% of earners but I can't afford a house" isn't | surprising when legislative factors make it hard to add | housing stock, when turnover is low, and when there's net | population inflow. | | My supposition was intentionally exaggerated to clarify | what happens when you don't build enough housing: not to be | pedantic, but understanding what happens in "extreme cases" | is a common technique in math and physics to understand | what happens in more common ones. | georgeecollins wrote: | >> it shouldn't happen if market forces are allowed to run | their course. | | Apparently you haven't met my neighbors. | aksss wrote: | Sounds like the logical thing to do is start desiring a | different place with sounder housing/zoning policy. Voting | with your feet is a thing when you can't win at the ballot | box. | coryrc wrote: | I think this is another large flaw in our voting system, | where things are too local (like zoning). You get a small | community of rich people in Berkeley block any new housing, | and you want to live there but have no influence on the | zoning laws. | | Japan's zoning is national and doesn't have this problem. | Thus Tokyo is far more affordable than San Francisco, | Mountain View, etc. | ryandrake wrote: | > > It's honestly quite scary how I'm in the top 2% of income | earners in my generation and yet I could barely afford to buy | a small place | | > I live in Los Angeles, where a "small place in semi- | desirable area" gets listed for 1.5M and goes for nearly 2M. | I'm somewhere in the top 5% of earners in California, but | that $2M 1950s tract housing would be >50% of my post-tax | income. | | I think the obvious answer here is that people in the top 2% | or top 5% are not buying houses... It's the people in the top | 0.1%. Last time I was home shopping, we were regularly outbid | by all-cash offers of 50%-100% over asking price, no | contingencies. These competing bidders are not teachers and | nurses. They're not even high-paid tech employees. Do you | really think a Senior Software Engineer at Microsoft has | $2.5M in cash sitting in his checking account to buy a home? | No way. These are all businesses, investors, serial landlords | buying their 60th house, hedge funds, 0.1% wealthy people-- | that's who's buying all these houses. Not us. | rdtwo wrote: | You don't need a lot of there is only one decent house a | week for an entire metro of 2-3m people somebody has a rich | uncle, a heloc or some windfall earnings they can lean on | to make it happen | nunez wrote: | but what about all-cash mortgage lending services and | margin loans? | jurassic wrote: | > Do you really think a Senior Software Engineer at | Microsoft has $2.5M in cash sitting in his checking account | to buy a home? No way. | | It's not common, but definitely possible. E.g. if you were | part of an acquihire. Or just got lucky somehow. I know a | senior with a crypto portfolio worth more than that because | he dropped a few thousand into bitcoin in the very early | days. | tomrod wrote: | Agreed with your analysis, and add previous homeowners who | can sell quickly and are making the cash from the equity. | lubesGordi wrote: | I'm under the impression that 'cash offer' just means that | whoever is buying has already secured their financing. That | means there's almost no risk of the deal falling through | and the sale can go from contingent to pending immediately. | This is better for the buyer because they sell faster. | Senior software eng at microsoft can pull this off no | problem (no one is buying a house with cash in their bank, | not even rich people). | dangrossman wrote: | > no one is buying a house with cash in their bank, not | even rich people | | That's how I bought my house, and I earn less as a | solopreneur than many FAANG employees in this community. | My "cash offer" came with the standard proof of funds: a | piece of paper the local Wells Fargo branch printed for | me on their letterhead that said I have an $X balance as | of that date, where $X was greater than the price I was | offering for the house. I walked into the same branch and | wired that cash to an escrow company a few days before | closing. | sib wrote: | No, there's still a distinction. Secured financing can | still fall through. | karpierz wrote: | It means that they aren't using a mortgage to buy it. If | there's a mortgage involved, then the offer becomes | contingent on the bank's due diligence which can cause | the deal to fall through in a variety of ways. | | For example: the bank will only loan you money up to the | appraised value of the home, which is done after the deal | is signed (banks won't send an appraiser to every house | you make an offer on). If the appraiser says the house is | worth 500K and you bid 800K, you need to find 300K some | other way (usually cash) or the deal falls through. | dyu wrote: | While it is true cash offers in the strict sense mean | real cash, it may also mean no-contingency offers. You | can go through mortgage underwriting first and commit to | pay the gap between appraised value and deal value, and | can make a no-contingency offer with minimum risk. Or, if | you are willing to lose your deposit (usually 3-5%) you | can also make a no-contingency offer to be more | attractive. | karpierz wrote: | > You can go through mortgage underwriting first and | commit to pay the gap between appraised value and deal | value, and can make a no-contingency offer with minimum | risk. | | Of course, but unless the amount you commit to bridge is | unbounded, you're still contingent in appraisal price. | And if you did commit to that, you're just making a cash | offer with extra steps. | | Deposits in my experience are token (around 2%). And | usually sellers will verify that you have the cash on | hand for no-contingency offers, since 2% is not worth | waiting and then redoing the house selling process. | jjav wrote: | No, cash offer means actually pay it cash. If there's any | kind of financing involved, the bank will need to approve | the purchase, slowing down the process, which is what a | cash offer bypasses. | | > no one is buying a house with cash in their bank, not | even rich people | | They most certainly are. Tons of real estate sales here | (Silicon Valley) are all-cash because the other people | making offers are also all-cash, so the only way to make | a competitive offer is if it is all-cash. | | So regular people who need a mortgage are completely shut | out of the market. | Dylan16807 wrote: | > If there's any kind of financing involved, the bank | will need to approve the purchase, slowing down the | process, which is what a cash offer bypasses. | | That's not "already secured" then, is it? | jjav wrote: | Correct. But the point was that if you're getting | financing from an institution, there is no such thing as | secured, before they evalute the house and the offer. | PaulDavisThe1st wrote: | Your impression is wrong. "Cash offer" means there is no | 3rd party loan involved. Obviously, if someone's aunt is | lending the buyer money, nobody is going to catch that. | But "cash offer" absolutely does not mean "secured | financing". | mywittyname wrote: | It means they have cash in a bank account ready to go. | Maybe they took out a loan against other assets to obtain | the cash, but a "cash offer" is literally the person is | handing over a cashier's check at closing. | | This means there is 0% chance of the deal falling | through. Not almost no risk, none at all. Failure to | follow through with the deal would be breach of contract | and the buyer is liable for damages, up-to-and-including, | being forced to hand over the money for the house. | a1pulley wrote: | To be fair, it's doable as a senior or staff engineer at a | big company earning 300 to 500k/yr. I'm (lucky enough to | be) in that range and qualified for a $1.5M loan. Combined | with 500k for a down payment, you can see how those $2M | houses are technically affordable. For now. | | Income data always lags reality by a couple of years: in my | experience, a lot of people have a lot more money than | you'd think. The winners of the eight purchases I've | attempted have been young dual income professional | families. | runeks wrote: | > I'm imagining a scenario where two iBuyer companies try to | outbid each other algorithmically, driving the prices further | and further out of reach of people who are looking for a | primary home. | | That's not how market making works. Market makers don't consume | other peoples' orders, which is required to push up the asked | price or down the bid price. | | Market making is effectively (1) observing that the market is | currently willing to buy some asset at the price A and sell it | at the price B (where A < B) and then (2) simultaneously | submitting a buy order at price A1 (where A1 > A) and a sell | order at price B1 (where B1 < B). Thus the market maker reduces | the difference between the buy price and sell price (the | "spread"). | bloqs wrote: | Fundamentally, NIMBYism and dysfunctional thinking drives this, | homes cannot both be affordable and a sure good investment as a | matter of definition | asdff wrote: | I would imagine if your algorithm was anything but the most | simplest it could check for this. Having some check like "What | is the median income among the workforce" and to not bid above | a certain amount relative to that will help prevent overbidding | on a house that no one in the area can realistically afford, | short of bots. | mywittyname wrote: | > The scary thing is that it's easy to see how something how | like this could drive a market boom and bust cycle. | | It would take a lot more than a billion dollars to make a dent | in the national housing market. Total housing sales in Feb22 | amounted to $161 billion. | | That's enough to make a temporary splash in a rural market, but | Zillow would need to spend 100x more than what they lost to | even move the needle. And spend 10000x as much to really drive | a boom/bust cycle nationally. | MuffinFlavored wrote: | > I'm imagining a scenario where two iBuyer companies try to | outbid each other algorithmically, driving the prices further | and further out of reach of people who are looking for a | primary home. | | This is just my personal anecdote but... I'm pretty sure when I | was rushing to show up to "new listings" on the weekends and | waiting in line for 10-40 families to get a walkthrough "open | house" wise, I feel like the sellers were going to pick a | family that showed up over a Zillow website. What % of closed | houses were being bought by families instead of "iBuyers" as | you said it? | IAmGraydon wrote: | You honestly think 2 iBuyer companies would have the liquidity | to move the entire housing market? I don't think you understand | the size of the US housing market. | | If you're in the top 2% of earners and can't buy a home, you | either live in a ridiculously expensive city (outlier) or have | a money management issue. | mdavis6890 wrote: | " The scary thing is that it's easy to see how something how | like this could drive a market boom and bust cycle." | | The opposite really. Speculators do their best to buy low which | pushes the price back up toward the mean in the aggregate, and | sell high, which pushes it back down toward the mean. | | Speculation is a stabilizing force overall. | | The boom and bust cycle in real estate is very real, but driven | by other things. | paxys wrote: | One can blame Airbnb, Zillow or whoever else, but the truth is | that speculation in real estate and vacation towns have both | been a thing for a very long time. If the population rises and | we refuse to build more houses, the existing ones will get more | expensive no matter what. The solution is out there in front of | us but everyone prefers to dance around it. | rrrrrrrrrrrryan wrote: | > One can blame Airbnb, but > speculation in ... vacation | towns [has] been a thing for a very long time. > the existing | [houses] will get more expensive no matter what. | | In vacation towns, the issue is that tourists are flooding | out of hotels, and into livable dwellings. | | Our hotel vacancy rates are rising just as fast as our home | prices. | | Perhaps the solution is tearing down hotels and building | high-rise apartments in their stead, but it seems a bit | wasteful compared to the alternative (regulating and taxing | Airbnbs to nudge tourists back into the hotels designed for | them). | margalabargala wrote: | On some level, this is hotels failing to compete. If I look | up both airbnbs and hotels in a popular vacation town | (randomly using Big Sky, MT, april 18-20, for this example) | then I see hotels and airbnbs in similar locations, and at | similar price points. However, there are airbnbs cheaper | than the cheapest hotels, and they have a number of | amenities that no hotels offer- notably, a washer/dryer in- | unit, a full kitchen, and multiple actual rooms. | | Given the same nightly price, who would choose a minimal | pared-down hotel room over an entire furnished condominium? | wpietri wrote: | Agreed, but there are big structural barriers. We generally | want necessary goods to have stable or decreasing prices over | time. But in America, we encourage home ownership as an | investment. For many, their biggest investment. That creates | a big constituency who want housing prices to go up. But we | also want people, especially those just starting out, to have | affordable housing. | | We can't have housing be both affordable and a good long-term | investment. We need to pick. And given increasing prices and | how 65% of Americans are howmeowners, I think we already did. | c-linkage wrote: | Change the word "house" to "car" and I think the problem | becomes not-so obvious. | | It's often bemoaned that personal cars are a waste of money | and space: they sit idle most of the time, we have to build | parking lots to accommodate them and that takes space. It | would be so much better if we could just hire cars on demand! | But this doesn't scale because the demand is not spread out | during the day -- absent carpooling, you still need one car | per person twice a day, meaning the supposed savings don't | exist. | | The same could be said for housing. If I'm at work all day, | then my house is sitting idle (it's not housing anyone) and | it takes up space. Why not let someone live in my house while | I'm at work? This also doesn't scale but for a different | reason: we all work during the day (excluding night-shift | workers) so at night we still need one house per person | (ignoring families, stretching the metaphor a bit). | | Now add "vacation homes" into the mix, now you're looking at | ~20% of housing (calculated from empirical analysis) in any | vacation hot-spots being rental properties. This means that | 20% of the existing housing that could be available for | permanent residents is missing. | | Saying "just build more housing" is just not realistic. 20% | more housing is a ludicrous amount of housing! | | Hotels, on the whole, are much more economical in space | utilization because people who are going on vacation do not | vacation to _visit a home_. They go to do things in the place | they are visiting and are thus _not at home_. | jacobr1 wrote: | We take two types of vacations: 1) foreign travel where we | are constantly on the go visiting new places and 2) home | rentals with extended family. | | For the second category usually it is the beach, but | sometimes in the mountains or other area. We tend to get | 10-15 members of our extended family and friends and the | activities often include making food communally, playing | games, moving between the house and walking distance | activity like the shore, even napping. The house very much | gets used and isn't just a place to sleep. | iso1631 wrote: | > But this doesn't scale because the demand is not spread | out during the day -- absent carpooling, you still need one | car per person twice a day, meaning the supposed savings | don't exist. | | Very rare for my neighbour to be using her car at the same | time I use my car. Not every car driver commutes 5 days a | week 9-5. | | I work from home, have done for years, my neighbour is | retired. | | I guarantee in my village there will be at least 10 unused | cars at any point during the year, probably nearer 50. | There certainly aren't that many empty houses | sudosysgen wrote: | Prices have increased tremendously _even in cities with | stagnant population_. It 's not just pure supply and demand - | real estate has a tendency to occupy enough of income in a | given area so that the lower paid cannot afford it. | bitlax wrote: | Well, there are two solutions. | moffkalast wrote: | True, we could lower the population back down by exiling | real estate agents. | jliptzin wrote: | There's even lower hanging fruit than that. I have a 6 | bedroom house, but local regulations state that I am not | allowed to live with more than 2 people unrelated to me. | Plenty of parking, tons of people looking for housing, but | legally I am forced to keep 3 bedrooms empty. | devoutsalsa wrote: | House Hacking, Extreme Edition: legally adopting your | roommates. | dopamean wrote: | Is this in the US? I've never heard of this before and am | curious to learn more. It sounds like something that is | nearly unenforceable. | zo1 wrote: | It doesn't have to be enforceable. But as soon as you do | this, any potential hiccup like having to evict tenants | or go to court for anything minor, and the state/police | find out about your little "unenforceable" violation. | notch656a wrote: | People on AirBnB generally are not 'tenants' and kicking | them out is as easy as trespassing them, optionally with | a Sheriff if they refuse to leave. You're reading way to | much into Sheriff Bill worrying about what's happening. | The AirBnB side is typically a civil matter. | adflux wrote: | Good point, never thought about that. Here in the | Netherlands, it used to be "common" to house other people | than your direct family for some time, e.g. during harvest | season. | danans wrote: | What a terrible policy. Do you mind sharing where this is? | [deleted] | delusional wrote: | Why do you have a 6 bedroom house if you only need 3 | bedrooms? | | It sounds like you're annoyed that you can't turn a profit | on your 3 bedrooms and the housing problem is really a | tangential concern. | paxys wrote: | Agreed. Heck I know several people who prefer to keep their | condos/houses empty rather than rent them out at market | rate because of 100% tenant friendly city and state laws. | Someone can move in and refuse to pay rent, refuse to | leave, use your house as a drug den, destroy your property | and lots more, and you can do _nothing_ about it. At that | point the city is just incentivizing homeowners to | contribute to the housing crisis. | flir wrote: | Sounds like those places need a land value tax, too. | tristor wrote: | > prefer to keep their condos/houses empty rather than | rent them out at market rate because of 100% tenant | friendly city and state laws. Someone can move in and | refuse to pay rent, refuse to leave, use your house as a | drug den, destroy your property and lots more, and you | can do nothing about it. | | I'm in this situation right now. The only way I'll rent | it out is if I personally know the tenant and their | personal character. Otherwise, I'd rather leave the | property empty. I didn't buy it as a rental, rather I | paid off my primary residence and then had to move, so | just kept it. I don't want to go outside the law, but | that would be my only option as a landlord if someone | tried to abuse me/my property, since the law offers me no | meaningful protection. To avoid that liability, I simply | don't rent. | schrijver wrote: | This is so alien to me. Why don't you sell the place? | Staying the owner of this place makes it so that you | can't spend your money tied up in this house, and this | house can't provide its roof to someone. Seems like both | of you loose. | jjav wrote: | > This is so alien to me. Why don't you sell the place? | | Selling might trigger a very large tax liability, | depending on original cost vs. current price. When that | is the case, it's better to keep it in case you might | want to return to the area in the future. | iso1631 wrote: | Presumably value appreciating more than selling it and | investing in other assets that are as safe. | lotsofpulp wrote: | Also, houses can allow you to lever up with non callable | loans. | schrijver wrote: | The parent you're replying too has no problem with | tenant-friendly laws: rather, these occupation limits are | both tenant and owner unfriendly, because you can't live | together in non-family arrangements that you might prefer | (as a tenant or as owner). I sympathize. | | With regards to your example, if you're rich enough to be | able to afford leaving a property you own empty, then I | have little sympathy. It seems like their cities and | states should introduce a sizeable vacancy tax. Or, as | they did in Amsterdam in the 1980ies, tolerate squatting. | And yes, maybe see if there's something that can be done | about backlogs in eviction court, but the baseline for me | is that it should never be feasible for an owner to leave | their house empty. | ForHackernews wrote: | The obvious solution is to just expropriate them and turn | them into public housing. It's working in Berlin. | schrijver wrote: | Or tolerate squatting, which used to be the case in the | Netherlands. | scruple wrote: | A home 2 doors down from myself had been empty since the | neighborhood was built in 2016 _until_ 2020 when rental | prices in our neighborhood blew through the ceiling. | | I always assumed their financial calculus was such that | the appreciation alone, on an empty home, was a better | prospect to them than what they could've gotten in rent | in those earlier years (weighted against | upkeep/maintenance vs. leaving the place empty and coming | by every 6 weeks to inspect the place -- which is what | they were doing). Now that these homes are renting out | for nearly 2x the mortgage price they have a tenant. I'm | unsurprised to hear that it's commonplace. It's just... | upsetting. | setr wrote: | For someone renting out a single home, I think it's the | risk of a bad tenant much more than the basic | calculations -- as GP said, there's really nothing you | can do about it. | | I personally know a case of a misbehaving tenant not | paying rent beyond the first two months pre-payment, | submitted a fraudulent check for the first actual | payment, had neighbor complaints endlessly with repeat | HoA fines (fines given to owner, of course) -- and 1.5 | years to evict.. | | It also turned out he had started subletting it out for | the same rent that he himself wasn't paying. | | That kind of thing can get you into a deep hole pretty | quickly, and there's not even much filtering you can do | ahead of time, even with third party verification | scruple wrote: | Like another commenter mentioned, you'd real think that | in the interest of addressing the housing shortage that | there be some better solutions for these problems on both | ends of the spectrum. | Teknoman117 wrote: | > Someone can move in and refuse to pay rent, refuse to | leave, use your house as a drug den, destroy your | property and lots more, and you can do nothing about it. | | This is one of those things that really just confuses me. | It's like no one could agree on happy medium between | "landlord can eject you whenever they want for whatever | reason" and "no one can make you leave, ever, for any | reason". | | And to whoever downvoted you, there are some places in | the bay that are demanding 6 months rent up front in | order to move in because they can't do much if you stop | paying rent. | TimPC wrote: | These laws are hard to get actually correct. The major | problem is court delays. There is a very high bar for | kicking someone out before they get their day in court | about whether it is fair to do so. This seems eminently | reasonable but there is also a severe shortage of | judicial services that result in court dates over a year | out to resolve such issues. In that year of time, it's | quite possible for a tenant with maybe $5K to their name | to accumulate $500K in damages and debts. For many such | tenants it is a cost they could never repay in their | lifetimes which means even if the landlord gets the | desired verdict they'll never see the capital they | wanted. | | I agree there are places in the world that are so biased | against landlords that they don't even try to get this | problem correct but I think for many cases the problem | isn't bad laws but rather the delays to being able to | execute reasonable actions to limit damages. I'm not sure | what a good solution is for many cases because I think it | would take fairly extreme evidence to kick someone out | without their day in court if they decided to fight it. I | do agree with landlords it should be easier to kick | someone out if they stop paying rent and that fact is | adequately documented. I mean stop paying rent in the | sense of an appropriate pattern not a single late | payment. | bombcar wrote: | From what I've heard is a common thing for landlords to | do is a "pay to vacate" where they show up at the door | with $1k in cash if the tenant will just leave. | dntrkv wrote: | > show up at the door with $1k in cash | | In SF, there have been six-figure buyouts to remove | tenants from rent-controlled properties. | mikeyouse wrote: | Sure, because those tenants signed contracts with | perpetual leases (as also understood by the landlords who | provided the contracts). Evicting in SF means you can't | turn your property into a Condo (only a TIC) - so to | maintain the value of the condo conversion option, | landlords pay tenants to leave. The buyouts are | proportional to the rent difference so it's not | surprising that someone who's rent is increasing from say | $1k/month to $4k/month would need a large sum of money | (that's taxable!) to be convinced to leave. | | Call the buyout $100k -- best case scenario, it's taxed | as capital gains so you'd take home $85k. At $3k/month | increase in rent, you'd be looking at a little over two | years before you're below water. | | Housing in California is broken in 1,000 different ways | but the tenant buyouts seem to be pretty minor in the | grand scheme of things. | nunez wrote: | if you go onto /r/landlord, you'll learn that "cash for | keys" is (a) usually way more than $1k, and (b) not a | fool-proof way of kicking someone out (since the squatter | still need a place to live, and they know that the cash | won't cover it). this was/is a huge HUGE issue with the | COVID real estate moratoriums that popped up. | dataflow wrote: | How does one accumulate $500K in damages and debt in 1 | year? That's like $41k/month. | nunez wrote: | buy three cats, and zero litter boxes, and zero litter. | make sure they aren't neutered. get a single male cat | since, hey, he's got needs. | | cook lots of greasy ass food and drain that oil straight | down the sink. toss condoms, paper towels, hell, | ANYTHING, down the toilet, since it's basically a trash | dispenser, right? | | once you're done having the cats pee their way through | the foundation (cat urine DESTROYS houses) and destroying | the plumbing, steal some copper on your way out with some | friends. | | oh, and this is a pre-war establishment where everything | is absolutely not up to code. | Zircom wrote: | Some people don't take kindly to being kicked out, even | if they're in the wrong, and there's not a lot you can do | to stop them from causing hundreds of thousands in | damages while you go through the process of evicting | them. | Teknoman117 wrote: | The first house I lived at in California was part 2 of | that - previous owners destroyed the place during a | foreclosure, so we got what was previously an $800k house | for $400k in a short sale by a bank. Took ~$50k to fix up | because we were willing to do the work ourselves over | about a year. | | It was _disgusting_. Glass and other obstructions flushed | down the pipes, literal feces on the walls, holes | everywhere, missing parts of the ceiling, fixtures ripped | out, etc. | | Move-in process was essentially move all our stuff to a | storage area, continue renting until we'd made the place | no longer a biohazard, then we moved in slowly as we | fixed up rooms. | | But hey, a few hours of work a day for a year essentially | saved a year of a FAANG salary on the place. | vkou wrote: | There is a happy medium, and many cities are in it, it's | just that landlords love painting that happy medium as | tyranny. | | They also never make any distinction between letting a | basement or a room in a home, a private landlord letting | a detached home, and a corporate landlord letting | hundreds of units. | sometimeshuman wrote: | Not arguing, but there are also many people who do not | rent their vacant property because they are too rich to | be bothered and are content with the capital gain | appreciation. | | Perhaps there needs to be a higher tax rate for vacant | property that is not a primary residence. | wwweston wrote: | > they can't do much if you stop paying rent. | | I'm aware of specific stories where bad-faith tenants | have made enforcement _difficult_ , but I'm also aware of | enough specific stories from the other side where tenants | -- even some who have committed no violations -- have | found themselves without housing to know that as a total | generalization, these statements are false. | | And you don't get to a resident-sourced homelessness | crisis if landlords are truly powerless (and sure, | coastal homelessness numbers are driven by bus-ticket | policies elsewhere, but it's not the whole story). | | AFAICT there is in fact a medium between "landlord can | eject you whenever they want for whatever reason" and "no | one can make you leave, ever, for any reason". Whether or | not it's a happy one probably depends more on court | outcomes than any apparent shortcomings in statutes, but | if anyone has _specific_ complaints about the law, | perhaps they should point them out. | anchpop wrote: | > I'm aware of specific stories where bad-faith tenants | have made enforcement difficult, but I'm also aware of | enough specific stories from the other side where tenants | -- even some who have committed no violations -- have | found themselves without housing to know that as a total | generalization, these statements are false. | | I'm aware of hundreds of stories about homicidal | cardiologists, but I wouldn't try to make a judgement | about cardiologists based on that because I have no | reason to think the stories I'm exposed are a | representative sample of cardiologists. In your case, | tenants who have committed no violations finding | themselves evicted make a much more sympathetic story | than landlords who want to evict an annoying tenant, so | I'd expect the former to be very overrepresented in what | you hear. | seanmcdirmid wrote: | Once you are exposed to one homicidal cardiologist, it's | no longer an anecdote. Landlords who aren't very thorough | in background and credit checks are very very likely to | have a bad experience (and they won't repeat the same | mistake twice). | | Being a landlord is a hard way at making money. | wwweston wrote: | Sure. As the saying goes "the plural of anecdote is not | data." And that goes as much for specific stories about | sympathetic landlords suffering from abusive tenants as | vice versa. | | How would we find out what the systemic pattern is? Maybe | we'd compile relevant court records and outcomes. Maybe | we'd collect information from tax filings. | | Or maybe we'd make bare assertions on HN. | MiroF wrote: | > It's like no one could agree on happy medium between | "landlord can eject you whenever they want for whatever | reason" and "no one can make you leave, ever, for any | reason". | | No place in the US actually has the latter unless you've | been letting them squat for half a decade or something, | the issue is court delays and landlord's wanting to make | their lot out to be worse than it is. | dijonman2 wrote: | It's very difficult to evict folks in Colorado, according | to someone I know who buys and rents homes for a living. | | I think most landlords are pro tenant until they find | someone who knows how to work the system. It costs them | so much that they are skiddish to all renters. | giraffe_lady wrote: | Landlords have chosen to enter an inherently adversarial | relationship with the goal of profiting from the other | party. I'm not entirely unsympathetic to their personal | pains here, but I don't believe "pro tenant" has a useful | meaning except in a context where you need to support | them _in opposition_ to some force or entity. And that | entity is landlords. | anchpop wrote: | As a widget maker, I'm pro widget-users even though I | technically have an adversarial relationship with them. | In particular, I'm pro widget-users because without them | I would be without money and without me they would be | without widgets, so we're both supporting each other | against the harsh forces of nature that would leave us | all destitute if we didn't work together. | Firmwarrior wrote: | > without me they would be without widgets | | It seems like it'd be obvious, but landlords don't | actually produce land or provide housing. They roll in | and take housing using their superior resources, then | charge rent to access it. | | In an ideal market, every renter would have the option of | being a landlord just like every car lessor has the | option of being a car owner. We just need enough housing | supply to make investing in housing a risky venture | instead of a government-guaranteed winner | | https://www.worksinprogress.co/issue/the-housing-theory- | of-e... | giraffe_lady wrote: | only comparable if the widget you make is a necessity for | life, really straining the meaning of the word "widget" | imo. | baq wrote: | If there's return, there's risk. All markets are | adversarial. | giraffe_lady wrote: | Yeah I don't really disagree with that. I don't believe | housing should be a "market" in the sense I think is | meant here. But if it is to be, I agree that landlords | need to accept the risk of their tenants not paying and | not leaving either. | endisneigh wrote: | How exactly is it inherently adversarial? Isn't what | you're saying also true to literally any for profit | transaction? | giraffe_lady wrote: | Only things that are absolute needs. You can walk away | from a profitable transaction, you can't walk away from | one you'll die without. | | People are willing to take much more extreme action | around housing (and food, medicine, ) than they are most | other goods. They're also less likely to agree there is | moral justification in profiting from these things. So | even when entering these transactions (they must, after | all), they may not respect the other party's profit | goals. | endisneigh wrote: | Should doctors work for free? Should farmers? | giraffe_lady wrote: | Do landlords labor? | endisneigh wrote: | Yes? Do you think the house magically takes care of | itself? | giraffe_lady wrote: | This comment made me see red, seriously the maddest I've | been in weeks. You couldn't have known that and I'm not | upset at you. | | _I_ take care of the house in this situation. The | landlord doesn't shovel snow or mow grass, I do. | | They do carry some of the burden specifically in taxes | and liability, yes I know. I also know the maintenance | responsibilities aren't inherently and legally mine, and | so I can be blamed for entering a contract that requires | me to do this. | | Anyway though it even more shows that landlords don't | inherently do anything. If they stopped maintaining it, | _the tenant_ is the one who has to live in the shitty | house and will wind up fixing it. | | What the landlord does is control access to housing. I | don't respect or value that and you're not going to | change my mind about it today. | endisneigh wrote: | If you honestly believe being a landlord is such a slam | dunk you should take out a mortgage, buy a property | somewhere in United States (there are places as cheap as | $50K) and rake in the cash. | | There are landlords who absolutely take care of all of | the maintenance - and of course there are landlords who | are absentee landlords as well. | | To say a landlord _inherently_ doesn 't do anything is | the most ridiculous thing I've read today. Thanks for the | laugh. | robertlagrant wrote: | > you're not going to change my mind about it today | | Probably not worth asking the question in the first | place, then. | jjav wrote: | > Landlords have chosen to enter an inherently | adversarial relationship with the goal of profiting from | the other party. | | There isn't any reason for it to be adversarial, it's | certainly not inherently so. Only if one or both sides | want to make it adversarial. | | It is supposed to be a win-win scenario. Some people | prefer to rent instead of buying, so they need a supply | of rentals and the owner needs someone to live there so | it doesn't sit empty costing them money. | | Fortunately I've never had one of the adversarial | landlords. I paid them on time and took good care of the | property and in exchange they have been super flexible | and let me do whatever I want. That's a win-win. | nunez wrote: | covid moratoriums were basically that for a lot of | landlords | jjav wrote: | > > "no one can make you leave, ever, for any reason". | | > No place in the US actually has the latter | | Not technically, no. But there are areas (e.g. San | Francisco) where getting a non-paying tenant out is close | enough to impossible that it might as well be. | xenadu02 wrote: | AFAIK that's not actually true. There are some crazy edge | cases but for the most part if a tenant stops paying rent | you can absolutely evict them in SF. Most of the horror | stories from landlords are attempts to evict for reasons | besides non-payment - which SF does make somewhat | difficult. | MiroF wrote: | > But there are areas (e.g. San Francisco) where getting | a non-paying tenant out is close enough to impossible | that it might as well be. | | You absolutely can evict people in SF, unless you are | discussing the recent eviction moratorium, which is not | ongoing. | registeredcorn wrote: | >landlord can eject you whenever they want for whatever | reason | | I don't understand. Why aren't landlords able to do this? | Isn't it seen as immoral to steal property from an owner? | pvarangot wrote: | There's the whole "house as a human right" angle that is | sometimes used to explain why tenant friendly laws exist, | but it's not the only angle you have to approach the | problem from. It's also true that a cities economy needs | a lot of "minimum wage" or whatever workers, and for | example if San Francisco didn't have tenant friendly laws | like rent control then the hospitality industry would | also suddenly need to pay a lot more to get bodies for | their people-heavy business. After some deep | conversations with a friend about this I now see this | from his angle where cities are just state-sponsored big | HOAs. If you get property in the HOA you have to abide by | their rules and one of their rules is that for certain | types of property if you rent it you can't easily kick | out the tenants. If you don't like it, no one is forcing | you to buy the property and even less to rent it, it's | your call. | [deleted] | astura wrote: | Because it's not just someone's property, it's also | someone's home. The place they live. Society has | collectively deemed kicking someone out of their home | with no notice to be undesirable, even if they are | currently struggling to pay rent. | | You have to keep in mind the vast majority of tenancies | are in good faith. | registeredcorn wrote: | True. I was reexamining the way I worded my question and | I certainly could have put things better. There is more | nuance there than I had given at first thought. | | Having grown up in rentals, and having had close family | member kicked out of a rental with something like 1 weeks | notice, I am very conflicted over the issue. Thank you | for not responding in kind to the way my question was | worded. | MiroF wrote: | > Why aren't landlords able to do this? Isn't it seen as | immoral to steal property from an owner? | | Well, for one, the government should enforce contract | neutrally - so if you sign a contract leasing your | property, you can't unilaterally break this without | cause. | | Second, we as a society have an interest in giving people | time to move their stuff out and find a new place to | live. | registeredcorn wrote: | Thanks for the response! Honestly, I was going to delete | my comment, I felt like I was asking in bad faith, but | can't since it had a reply. | | I guess I see your point. I tend to side a bit harder | with the landlords, but I don't want people tossed out on | the streets without any sort of warning either. | closeparen wrote: | That's just a lease. Leases have fixed terms. When the | lease is up either side can give 30 days notice that they | will not be renewing. That is true even in places with | minimal to no tenant protection laws. | | In a tenant protection environment, the tenant has the | option to cancel when the lease ends, but the landlord | does not. Regardless of where you are in the contract | cycle, the landlord's only way to end the contract is | through an eviction, and he will have to prove in court | that the situation meets one of the lawful bases for | eviction. | MiroF wrote: | > In a tenant protection environment, landlords cannot | just decline to renew leases. | | Unless we're talking about some rent controlled context, | where in the US is this law? | closeparen wrote: | For example, the entire state of California, including | municipalities that don't have rent control and | properties that aren't covered by existing rent controls. | | https://sfrb.org/article/summary-ab-1482-california- | tenant-p... | MiroF wrote: | I think the large majority of units in CA are not covered | by any sort of just cause eviction law. This law has | several very large exemptions. | tempnow987 wrote: | I had a friend who let someone move in as part of an | apartment share. Person NEVER paid them a nickel, never | paid landlord anything, claimed they felt unsafe and got | a restraining order. It was actually genius. | | My (female) friend HAD TO MOVE OUT of the house she was | renting, the landlord required she still pay rent on the | lease. "self-help" (changing locks) was totally out. | | All this would have been fine I think if she could have | gone to court in a week or two (the person literally | hadn't paid anyone anything). | | Instead it was 18 months to the FIRST court date, plenty | of drama between A and B, and at that court date it was | clear it was going to take a LONG time longer (in | fairness COVID came into picture but still). | | It turned out of course this person had done this | repeatedly. In my friends case the landlord just demanded | she keep on paying rent and so was no help on eviction. | So she was paying rent on a new place, paying rent on the | old place AND paying legal bills vs a tenant getting free | community legal help and who was an absolute expert in | the rules. | | Luckily for her for some reason tenant DID want to move | eventually, and they basically arranged a settlement. She | paid landlord for some damages, she paid tenant a cash | for keys amount (substantial) and was allowed to go on | with her life. | | You could only afford this on a bay area tech level | salary. For normal landlords and people this is insane. | | When someone says the eviction has to be "for" a reason, | and a court has to review that reason and approve it, in | the bay area that easily 1-2 years if someone wants to | stretch it out. | jdmichal wrote: | So she basically directly sublet part of her apartment, | and is surprised the landlord didn't care and still held | her responsible? That's exactly the stance the landlord | should take in such a situation. Assuming it wasn't just | directly a breach of contract of the rental terms to | start with, which would even further just protect the | landlord. | | Did she even bother to draft a contract with the | subletter? Or was this all just, "sure, stranger, move | right on in to the property for which I am legally | obligated? I'm sure this will all work out fine." | 1024core wrote: | Could you not put ejection conditions in the lease | itself? (SF resident here, but with no experience in | landlording). I'm wondering why can't a landlord put in | the lease a term like "if tenant does not pay rent for 30 | days, tenant gives up all of his rights and landlord has | the right to eject tenant within 15 days". | astura wrote: | You generally can't put illegal terms in a contact like | that. | mistrial9 wrote: | > you can do nothing about it | | lies, damn lies, and landlord lies.. | gnicholas wrote: | A friend bought a duplex in Berkeley. Due to the tenant- | friendly laws there, she will only rent to international | university affiliates whose roles/visas will require them | to leave after a year or two. | | Interestingly, she is very YIMBY and liberal, and even | has a PhD in urban planning. But no one wants a forever | tenant! | MiroF wrote: | You're not a liberal if you're casually violating fair | housing law :) | | Everyone wants to call themselves a liberal or | progressive nowadays, it's bizarre. These things are | about actions, not self-assigned labels. | ensignavenger wrote: | Is visa status a protected class for rentals in | CA/Berkley? | pvarangot wrote: | Yes it is, but it's impossible to enforce because | landlords can ask for your drivers license/ID with the | application and if you are on a visa your ID says | "LIMITED TERM" on it. So they can always say yes or no | based on that but pretend it was something else that made | them make the choice. | ensignavenger wrote: | Answering my own question- it appears that yes, it is- | https://www.dfeh.ca.gov/Housing/#whoBody | gnicholas wrote: | Looks like immigration status is protected. I wonder if a | plaintiff could win a case on the grounds that they were | discriminated against because they _weren 't_ on a | temporary visa. | | As a former lawyer, I realize it's possible to make the | argument, but it's probably clear from the legislative | history of the law that it's meant to protect people who | are on visas, not people who aren't. | | Also, she would probably say that her rule is that she | only rents to people who have an extremely compelling | reason to leave after 1-2 years. Compelling reasons | include time-limited positions (postdocs) or visa | restrictions. | dragonwriter wrote: | Citizenship and national origin are, as is immigration | status (under different laws.) Also source of income. | | Renting only to international university affiliates on | particular kinds of visas is _directly_ discrimination on | the basis of all of citizenship, national origin, | immigration status, and source of income, and might also | constitute disparate impact discrimination (which | California FEHA also covers as well as direct | discrimination) on other protected grounds if the direct | discrimination wasn 't enough. | rdtwo wrote: | Liberals can break laws just like conservatives can. Free | country | Dylan16807 wrote: | Sure they can! | | But ongoing intent to break certain categories of law | will also mean that certain political labels are | incorrect. | nebula8804 wrote: | >Everyone wants to call themselves a liberal or | progressive nowadays, it's bizarre. | | Thats just the scam the corporate left likes to play. | They love to be super "progressive" while actually | performing nothing progressive other than performance | art. | | It costs nothing to call yourself "progressive". Hell I | bet Trump has probably called himself "progressive" ha | ha. | | Like you said, its actions that matter. If you look at | that, essentially the elected progressives in this | country trend towards 0. | dragonwriter wrote: | > the corporate left | | This thing does not exist. | Cederfjard wrote: | Just curious as an outsider, what laws are she breaking | by doing that? | [deleted] | MiroF wrote: | Civil Rights Act of 1968, Unruh Civil Rights Act, ... | there are a few other California specific legal statutes | around civil rights/housing discrimination. | missedthecue wrote: | What part of the civil rights act does it violate? | MiroF wrote: | It's discussed on other parts of the thread. Also, I was | assuming that this was not an owner-occupied duplex. It | falls to state law if it is. | dragonwriter wrote: | The Fair Housing Act (the part of the 1968 Civil Rights | Act you are referring to) exempts owner-occupied | buildings with less than five units, so it wouldn't apply | to the other unit in an owner-occupied duplex. | MiroF wrote: | I didn't understand the GP to mean they were occupying | the duplex. But in that context, it still violates | california fair housing law. | dragonwriter wrote: | Oh sure, rather flagrantly. I count at least four | protected traits it discriminates on. (Mentioned in a | post in another branch of the thread.) | seanmcdirmid wrote: | If you are sharing your own house vs renting out an | autonomous unit, the rules are different (at least here | in Seattle), you can discriminate a lot more legally than | you could otherwise. So someone who rents room in their | home only to Chinese international students is completely | ok (as long as they share living space with the | landlord). Not sure what the laws are in California, but | federally it's kosher. | dragonwriter wrote: | > If you are sharing your own house vs renting out an | autonomous unit | | A duplex by definition is a building with two separate | dwelling units. | [deleted] | dragonwriter wrote: | > Interestingly, she is very YIMBY and liberal | | Do you mean "liberal" the way progressives use it (i.e., | center-right pro-corporate capitalist) or "liberal" the | way conservatives use it (i.e., left of the Republican | Party, with more liberal = more left)? | mentalpiracy wrote: | Why should we use this as an example? You're talking | about people who are throwing away money by leaving | assets idle - and implying that they obviously don't know | how to operate in this market. | paxys wrote: | > You're talking about people who are throwing away money | by leaving assets idle | | No, they are watching their assets shoot up in value | every day without any operational burden. | | > and implying that they obviously don't know how to | operate in this market | | When did I say that? In fact what they are doing the most | logical thing. | jjav wrote: | > > You're talking about people who are throwing away | money by leaving assets idle | | > No, they are watching their assets shoot up in value | every day without any operational burden. | | It's not either/or. They might be watching the property | value go up every year, but they are simultaneously | throwing money away by leaving it empty. They could have | been profiting from both sources but chose to profit only | from one. | | (Often rationally, since a bad tenant can destroy the | property and never pay, but still.) | cellis wrote: | As a potential landlord who is doing this very thing | right now, it isn't really "throwing money away", because | of asset appreciation. If you get stuck with a bad tenant | it's way more hassle than if you had just let it sit and | AirBnB'd it every once in a while. Especially for | properties where the rent is less than the appreciation | per month. | schrijver wrote: | How do you feel about the ethical aspect? Now the home is | not useful, except as an investment to you, but if you | sold it there's lots of ways you could make money instead | (and in ways that provide value to others!). And the | place would be someone's home. Seems weird to let it be | stay empty like that. | cellis wrote: | I had hoped to not wade too deep into this discussion for | privacy reasons, but essentially I have quasi-rented it | to someone close to me who I trust, and isn't in need of | the place. They cover the utilities they use, and I don't | charge them rent. Still, you have a valid point. I | honestly don't like the AirBnBification of neighborhoods | across the world. But, the time commitment I need right | now to get licensure and then to interview rental | candidates/hire a management just isn't worth the time | commitment. Besides that, I like the optionality of | visiting the city, and I did live in the house last year | ( saved a ton on rent by buying in another state and | working remotely there for my employer in California | during the pandemic ). Hope that adds some clarity. I'm | not part of the global elite! | vincentmarle wrote: | You are neglecting opportunity costs: if you could earn | double (appreciation + rent) instead of just | appreciation, you're leaving money on the table. | boring_twenties wrote: | That extra money comes with additional risks, which the | parent has judged to be not worth it. | sib wrote: | But also avoiding a very real possibility of significant | costs (property destruction, litigation to remove bad | tenants, etc.) | BirdieNZ wrote: | Think about this: land value appreciation is so crazy | that you can _not charge rent_ and still make enough | money that a property has a good return on investment. | LegitShady wrote: | Thats because your neighbours probably won't like you | opening a rooming house in their residential neighborhood | without some kind of consultation with them on the zoning | and appropriateness of such a thing. | | I've seen houses where every room (including the living | room) is occupied by a foreign student and the 'landlord' | is running a slum rooming house. Thats what you're not | supposed to be able to do without getting approval. It | impacts you negatively to avoid impacting your neighbours | without consulting with them. | tonyarkles wrote: | As a curiosity, since you're probably better versed in this | than I am, does the situation change if you yourself didn't | live there? I'm pretty sure around here (300kperson city in | Canada), the rules are different if one of the roommates is | the owner or if it's a purely rental property... which | seemed even more confusing! | gnopgnip wrote: | Many of these laws are a family plus two unrelated people. | There have been broad changes in how a family is defined in | this context. | aksss wrote: | I wonder if you could find exemptions for refugees. Seem to | be a lot of those lately. Not ignoring the sad irony of | this, but if you want to put that space to use there may | some allowable loopholes. | pge wrote: | I am working through this right now with a house that I | recently bought. No way around the restrictions, but we | did find one loophole. Two _related_ families (eg two | families in which the respective fathers are brothers) | can live in the same house, at least under the way the | restrictions are written where I live. We are able to | house two refugee families in the same house legally as a | result, but it 's a shame that it is not easier to do, | and possible with two unrelated families. | KptMarchewa wrote: | >local regulations state that I am not allowed to live with | more than 2 people unrelated to me | | What? Where is that? It sounds insane and extreme | overreach. How can somebody regulate with whom consenting | adults choose to live? | londons_explore wrote: | Regulations like this are common. | | Usually you need to get a special license, have home | inspections annually, pay various fees, etc. if you want | to do so. | KptMarchewa wrote: | Regulations where you'd specify minimum floor size, or | rooms per person make sense for me. It's about straight | up saying you can't live with people without state | sanctioning the relationship. | londons_explore wrote: | In my region, the rules are _so incredibly precise_. | Things like washing up areas must have at least 3 bowels | in. Toilets must have flush handles above a certain | height and below another height. Radiators must have 6 | heat settings... Etc. | | The entire aim seems to be to make running such a house | not illegal, but very difficult and very expensive. | dave5104 wrote: | Occupancy limits are somewhat common in many | cities/towns. But probably only enforced via neighborly | complaint, so you don't really hear about them. | | Just searching "occupancy limits city" popped up the | limits for Boulder, CO: | https://bouldercolorado.gov/occupancy-limits | zardo wrote: | The kind of thing where you're fine unless you're "a | problem" for one of your neighbors | | A problem as defined by your nosiest, most uptight, or | most xenophobic neighbor. | panzagl wrote: | Boulder is... special. A college town where a bunch of | rich people decided to live. I've never seen a campus | with so many non-students on it, just hanging out like | they belong there or zipping through campus on their | bikes at 40 mph. But most college towns have similar | occupancy laws for neighborhoods where they want to keep | students of the wrong sort out of. | pge wrote: | These kinds of regulations are extremely common (I might | even go so far as to say they are the norm) in many US | suburbs. Such restrictions are intended to prevent | single-famiy homes from being used as large group houses. | A probably intentional byproduct of the restrictions is | also to keep lower-income residents out of desirable | neighborhoods (by preventing for example, two families | from occupying a large house that neither could afford | individually). Minimum lot sizes have a similar | consequence. If you're interested in getting into the | history of housing restrictions, particularly as they | pertain to efforts to limit lower-income (often minority) | buyers, Richard Rothstein's The Color of Law is a good | book to start with. | programmarchy wrote: | If you have a family home, you probably don't want 8 | college students moving into the house next door to you. | This was a restriction in my college town. As a student, | I didn't like it, but as a homeowner with a family, I | completely understand. | Dylan16807 wrote: | 8 people in an entire house? I don't see the problem. | | 3 college students could just about as easily be bad | neighbors as 8. | | Unless the idea is that 3 students would be too poor to | live in that neighborhood, in which case a rule like that | is even worse than I thought. | KptMarchewa wrote: | Most people in the world live and raise families in the | conditions where they don't control what happens behind | the floor, walls and ceilings. This seems like very | strong entitlement. | programmarchy wrote: | Most people in the world don't have time to post on HN, | or even have the privilege of knowing it exists. You | posting a reply here is a very strong entitlement. | | But if they did, they would probably come here and reply | that they don't want 8 drunken college bros constantly | partying next to their house either. | notch656a wrote: | 62% of the world has access to internet. HN is also free. | There is no vetting process to see that you are wealthy. | Somewhere like philippines, even the dirt poor know | English, so English isn't necessarily a barrier either. | | Personal I live in a SFH, and I have a family. Even | though I don't want 8 drunken bros living next to me, | they have as much right to exist as my rather loud and | surely annoying toddler has. | [deleted] | MiroF wrote: | If you want to control who lives next to you, feel free | to buy the neighboring properties. | scatters wrote: | Elsewhere on the thread you pointed out that fair housing | laws mean that you _don 't_ get to control who lives next | to you even if you're renting out those properties. So | your only option would be to leave them empty. | MiroF wrote: | Yes, you're correct. | Drdrdrq wrote: | That wouldn't help much - there would still be neighbors | bordering your (now bigger) property, just further away. | You need to buy an island instead. | programmarchy wrote: | Thankfully, I don't live in ancapistan, so I can vote | instead. | vkou wrote: | Yes, and by voting the way that you do, you are creating | a housing crisis. | | I'd like for people expressing these political | preferences to not be allowed to live in my neighbourhood | either, but unlike you, I also recognize that you have as | much right to live there as those 8 college students. | conanbatt wrote: | Actually if you live in the bay area, you live in an | oligarchy. A great part of the renters in the area cannot | vote and thus are not represented in this matter. | | If foreigners could vote in San Francisco, the majority | of which are renters, it would overwhelmingly crush this | position. | jjav wrote: | > but as a homeowner with a family, I completely | understand. | | Why do you understand? Why would you care how many people | live next door? | | There are potential negatives, sure. Like noise or making | a mess outside. But those are already covered by other | ordinances, so just enforce those. | | As a homeowner with a family, I wouldn't care if there | are 50 people stuffed living in the house next door. As | long as they're quiet and don't make a mess, it's none of | my business. | knodi123 wrote: | > legally I am forced to keep 3 bedrooms empty. | | Not at all! Look into what it would take to lease them out | to a self-storage facility. :-P | RC_ITR wrote: | Exactly. Formerly the 'unseen' behavior was seasonal renting | brokered through agents or high-end advertising. This still | kept locals out of the house, but 1) it was harder for normal | people to become aware of the listings in the first place 2) | One renter who comes every weekend for an entire season | 'feels' more like a local. | | Now what we have is listings that are easily found via google | and a much broader set of visitors whose faces change every | week. Our limited brains interpret that as a much bigger | shift than it may actually be. | tshaddox wrote: | > If the population rises and we refuse to build more houses | | Building more houses is generally good too, but it's a bit of | a cop-out to blame the whole situation on that. Totally | independent of supply concerns, I would argue that it's not | great that in so many areas the value of homes seems to be | almost entirely divorced from _the fact that people need | homes to live in_. | | Imagine if a bunch of very wealthy people just decided to | start collecting medicine, not to use as medicine, but to | just collect and perhaps sell later at a higher price. Is | that within their legal rights? Sure, it seems like it. Would | producing more medicine be a good thing? Yeah, sure, more | medicine is probably generally a good thing. But is it still | really crappy that people's habits for collecting medicine | are driving up the cost of medicine for people who want to | _take the darn medicine_? Yeah, it 's crappy. | anchpop wrote: | In areas where home prices are high, the vast majority of | homes have people living in them. So the idea that home | prices are inflated by people buying homes and not doing | anything with them seems a bit suspect to me. | | Additionally it kind of strains belief that people are | buying homes, paying property tax, etc. just because they | like collecting them the way a kid likes collecting pokemon | cards. More likely they'd buy a home because they expect | home prices to rise and they'll be able to sell the home | for more in the future. It may be unintuitive, but if your | market is not incredibly supply-constrained this is | actually a good thing. | | Here's why. Let's say there's an up-and-coming college | town, and speculators think that in a few years the town | will become trendy and many people will want to move there. | If they're right, demand will go up and home prices will | rise. That means you can buy a home now on the cheap and | sell it in a couple years when houses are more expensive to | make a profit. But of course, when you buy a house now, | you're contributing to demand for houses, so you're making | the price rise in the present in response to a change in | demand you anticipate happening years from now. Since home | prices are rising, it now becomes more profitable for | people to build new homes. (Their costs haven't changed, | but now they can sell the homes to speculators who are | willing to pay a lot because _they_ expect to sell the | homes to the people who 'll move in as the town becomes | trendier.) So what you get is people building homes now _in | preparation_ for people wanting to move here years from | now. Making homes available will cause home prices to go | down, until the market is at equilibrium and homebuilders | are no longer willing to build homes for the price that | homebuyers are expected to be willing to pay. | | So in theory it all works out quite nicely. In practice, | people who own the homes hate this because they like that | the home they bought for $200k in the 90s is worth $2M now, | so the lobby to get local governments to ban people from | building homes. If there were enough homes that everyone | who wanted to live there could, the prices of housing would | come crashing down and homeowners would lose the bag they | worked so hard to get (not). | tshaddox wrote: | My point isn't that people don't use their collectible | homes to live in. There are undoubtedly some vacant homes | used as collectibles, but that's not the whole problem. | The point is that the value of the homes are largely | divorced from the fact that people need homes to live in. | The fact that home prices have skyrocketed recently (and | certainly not simply due to population growth or a | reduction in supply) ought to make this fairly clear. | | > Additionally it kind of strains belief that people are | buying homes, paying property tax, etc. just because they | like collecting them the way a kid likes collecting | pokemon cards. More likely they'd buy a home because they | expect home prices to rise and they'll be able to sell | the home for more in the future. | | That second sentence is, of course, precisely what I'm | talking about. Although that is also the same motivation, | at least in my experience, of a lot of Pokemon card | collecting. When I was in middle school, you could buy a | Charizard for $100, and it wasn't because you could win | back that $100 by playing that Charizard in a tournament, | and it wasn't because you got $100 of value admiring the | aesthetics of the card. Also of note, those Charizards | now sell for tens of thousands of dollars, and it's still | not being of their value in competitive play or their | aesthetic value. | jjav wrote: | > In areas where home prices are high, the vast majority | of homes have people living in them. | | When the very rich park wealth in real estate, it is | precisely in the ares where prices are highest. Not much | point in parking wealth in a cheap house in the midwest. | | https://nypost.com/2021/08/05/nearly-half-of-luxury- | units-em... | dionidium wrote: | The problem here is that there are something like 3.5 | million housing units in New York City and Billionaires' | Row is like 5 buildings. It just simply doesn't matter if | _every single one_ of those units is empty. We 're not | talking about enough units to matter. | Retric wrote: | Billionaires row is hardly the only home sitting empty as | an investment. Further they represent an outsized share | of housing space even if the total number of apartments | isn't that high. | | So even if 5 buildings out of 300 skyscrapers are at 50% | occupancy on their own don't matter much they still | impact the market when combined with similar investments. | Worse they prime the bubble by convincing more people to | invest without putting them up for rent. | gregable wrote: | Yes, and this would really be awful in the short term, but | in the medium term medicine companies would just spin up | more production until the "very wealthy people" demand has | been met and medicine becomes available again at some | reasonable price. | | The fact that this is very likely prevents most of the | speculation in the first place. | | The difference with real estate is that the owners get to | determine production levels, via local zoning laws. | | Sure, there is some natural scarcity: Land cannot be | created, but in most cases artificial scarcity is the | issue. | thatfrenchguy wrote: | I mean, the US missed on building ~15m housing units in the | last decade, we can bitch about airbnb all day, that | doesn't make 15m housing unit appear. | paxys wrote: | Thing is if people start hoarding medicine then new | companies can pop up and fill in the gap, or existing ones | can increase production, making the whole thing pointless | to do. Same goes for every other "necessary to life" | product. Temporary disruptions will be handled by the | market in the long term, and in the worst case government | can step in and regulate. Housing is probably the only | sector where all the laws and regulations work the other | way - to actively stop you from building more of something | that everyone needs. | 3np wrote: | This is missing the point that land is a finite resource | and homes aren't fungible. It doesn't help most | Californians that more homes can be built in rural | Arkansas. | jjav wrote: | > Thing is if people start hoarding medicine then new | companies can pop up and fill in the gap, or existing | ones can increase production, making the whole thing | pointless to do. | | Hoarding medicine isn't a trend and even so, this market | correction doesn't happen. Look at all the medicines with | insanely high prices because there won't be any | competition. | cma wrote: | > Housing is probably the only sector where all the laws | and regulations work the other way - to actively stop you | from building more of something that everyone needs. | | The patent system does this in medicine. | tshaddox wrote: | Okay, but how deep is the appetite for buying medicine as | collectibles? What if doubling the production of medicine | just means that now the wealthiest 2% collects all the | medicine instead of the wealthiest 1%? Not to mention, | how long will it take to ramp up all this medicine | production? | mistrial9 wrote: | no, no - this is a real-estate Zillow thread BUT.. search | for "pharma bros" and you will see this is not a fanciful | example | jsnk wrote: | This analogy is quite lacking. | | You should also mention that this medicine rich people are | collecting also has dozens of other alternative medicines | with hundreds of thousands in volume because other cities | exist. | | Also you should mention that some of these rich people are | not rich people at all, but working class people who's | lived in a location for decades which has become a | desirable location in recent years thanks to some other | people who generated wealth in the area. | | Also you forgot to bring up the local government ran by | some of these rich people who are blocking any measure to | increase the supply of the medicine in the area. This | certainly can crash the entrenched medicine cartel in the | city, but some of these cities are North Korean style de | facto one party system where no other opposition may | challenge the status quo. | giraffe_lady wrote: | Cites are not fungible, I hate that this always comes up. | I have relationships here going back to my childhood, I | sometimes visit the grave of the person I am named for, I | spend every sunday afternoon cooking and eating with the | 97-year-old who took me in and nursed me back to health | decades ago. If I move to another city these things | aren't coming with. | | Now you can dismiss these things as inherently less | meaningful than, and therefore rightly subjected to, the | economic desires of asset holders. That's a much more | radical position than I think you're wanting to take here | though. When you say or imply people facing unaffordable | housing can just move somewhere else, this is a position | you're endorsing. | | The analogy doesn't have to cover every nuance of the | situation to be valuable. A necessity of life has become | a competitive investment vehicle, and the people most | hurt by this are told that it is good and correct and | they should accept it by wildly upending their lives for | no personal benefit. | lotsofpulp wrote: | > A necessity of life has become a competitive investment | vehicle | | My perspective is that a necessity of life (land) has | started bumping up against the limits of nature. | Population has drastically increased, and for various | reasons such as increased access to information, economic | agglomeration, etc, certain areas of land are in far more | demand than others relative to supply. | | Allocating scarce resources (sufficient land to have a | detached single family home and a driveway) in such a | scenario will always lead to some people getting what | they want, while others do not. | | Some options are (not exclusive to these) | | -letting certain classes of people have higher priority | than others (such as California's law that keeps property | taxes artificially low for those who were there before | others) | | -letting the amount of money determine who gets to live | where, due to increasing house prices and commensurate | increases in property taxes. | | -changing zoning laws so that areas are modified from low | density to high density housing, increasing the supply. | This one causes various knock on effects, hence it is | fought against in popular places that have reached its | limits under the existing scheme (such as Bay Area and | SFH) | | There are no options where no one has to sacrifice. The | investment vehicle aspect of land is negligible and more | of a consequence of the extreme variations in demand of | land in different regions. | tshaddox wrote: | > My perspective is that a necessity of life (land) has | started bumping up against the limits of nature. | Population has drastically increased, and for various | reasons such as increased access to information, economic | agglomeration, etc, certain areas of land are in far more | demand than others relative to supply. | | I think this is another all-too-convenient scapegoat, | similar to "we just need more houses." I would again | suggest that perhaps the problem really truly is that | people are using houses as collectibles rather than as | places to live. | lotsofpulp wrote: | As an illustration of how different the supply/demand | situation is across the US, see this data: | | https://www.redfin.com/news/?p=73975 | | All the data I see does not indicate that people are | buying regular houses as collectibles in hot markets. | There is simply that much demand and basically no supply, | especially in western cities. I do not have hard data on | how many of these sales are owner occupied or not, but | from personal experience over the past 10+ years, none of | these neighborhoods seem empty for part or all of the | year. | jjav wrote: | > If I move to another city these things aren't coming | with. | | This is the reason for things like California Prop 13. It | gives a benefit to long-time locals to continue living in | the same place. Which on the whole seems like a good | thing. People can set down roots and become "locals" | instead of having a city of ever-changing population who | then don't really care so much about the area because | they are transient and will be moving away soon. | | But most housing threads on HN favor the idea that | incoming outsiders should be able to efficiently displace | locals as long as they have more money to do so, and thus | oppose prop 13. | lostapathy wrote: | People who are born and grown up in an area but can't | stay as adults are also "locals" that are hurt by prop | 13. | sonofhans wrote: | I love your comment, and this way of thinking. | | > A necessity of life has become a competitive investment | vehicle, and the people most hurt by this are told that | it is good and correct and they should accept it by | wildly upending their lives for no personal benefit. | | I agree also with your other comments that this view is | fundamentally inhuman. So many people in this thread are | responding with, "Don't like it? Move!" To the extent | that is a humane viewpoint it is either privileged or | defeatist. Society is us. We have chosen social policy | which turns the fundaments of life into investment | strategies for the over-propertied. We can choose | differently. | tshaddox wrote: | > Cites are not fungible, I hate that this always comes | up. | | Yep. Why should we tell people "cities are fungible, just | go live somewhere else so we can buy all the collectible | homes here" instead of "cities are fungible, just go buy | collectible homes somewhere else so we can live here"? | seanmcdirmid wrote: | They aren't fungible to you, but to other people moving | into your city from somewhere else because of economic | opportunities they are (or they wouldn't have moved so | easily). | rednerrus wrote: | We lost four years of housing growth because of the | recession. | MrMan wrote: | where I live all they do is build houses. this idea that we | arent building houses mystifies me. | thelock85 wrote: | That speculation is being scaled/super-charged through | technology, and making the proposed solution to build more | harder, in part because an increase in corporate landlording | dilutes the political power of regular homeowners. | | I'm really trying to think of reasons why a PE market maker | that just bought a sub-division would want to build more and | depress their future rents (unless the area has massive | population growth). | hyperbovine wrote: | > The solution is out there in front of us but everyone | prefers to dance around it. | | Could not agree more, just so we're all on the same page it | is: | | https://en.wikipedia.org/wiki/Human_population_planning | | Oh, sorry, were you referring to something else? :-) | JaimeThompson wrote: | A town close to me has lots of land to build new homes, few | restrictions, fast fiber Internet and prices are still going | up way faster than before which seems to indicate multiple | things are causing this. | ar_lan wrote: | NIMBYs are a special breed of evil | somewhereoutth wrote: | The problem is that interest rates are too low. 5% interest | rates would fix house prices (and other capital mis- | allocation). | | The reason why lots of boomers are sitting on large amounts | of housing equity is that they bought _before_ the transition | to low rates. The reverse will also hold - anyone buying now | before the transition to higher rates will get clobbered (in | terms of loan to equity - probably they 'll be ok repayment | wise so long as they have a fixed mortgage) | knodi123 wrote: | > The solution is out there in front of us but everyone | prefers to dance around it. | | Jesus, man, slow down. It's a little early to start | suggesting cannibalism as a solution to the housing crisis. | adam_arthur wrote: | Number of housing units to households is the same as year | 2000. 1.1:1 | | So the undersupply story is a myth. There has been a recent | pull forward in demand that ate through all active listings | though. | rahimnathwani wrote: | "Do market makers in the stock market run into this problem?" | | Yes, that's why they have to account for the probability that | whoever hits their bid is an informed trader (vs. | uninformed/noise trader). And it's part of the reason they can | provide price improvement when they source order flow from retail | brokers, whose customers are mainly uninformed/noise traders. | krinchan wrote: | It definitely feels like market making is something all parties | involved in a real estate transaction would like. The article | lays out the problems of applying the concept to real estate | pretty clearly. | | Personally, I think the physical cost of holding inventory and | the lack of commodity status (commoditization?) for houses is | manageable, if not outright surmountable. I think the condition | that simply must change for this business model to work is the | velocity of buying and selling residential real estate. Until you | can go from "I want this" to "I bought this" or "I want to sell | this" to "I sold this" in a scale of days if not hours, any | market maker in residential real estate is going to end up a | market risk taker implicitly betting on the future price of the | property. Even if Zillow could move directly from closing on the | house from the seller to initiating a sell to another buyer in | less than 24 hours, there's still several weeks involved. If the | market is volatile, that's a substantial risk exposure. | | Simply put, it needs to be possible to move the title twice in 24 | hours along with some way to finance a buyer on a very | accelerated timescale. Both of these things will need reforms at | all levels of government: municipal, state, and federal. I just | don't see that happening for a very long time, to be honest. | Invictus0 wrote: | I wonder how this would have ended up if they just dealt in | options instead of taking on the inventory. For those that don't | know, a real estate option gives the holder the right to buy the | property at a fixed price within a certain timeframe, in exchange | for a premium. This would have been a much better way to learn | the market than diving straight into home purchases. | sokoloff wrote: | Most people who are selling their house are doing so in order | to buy another one. That is to say they need the money from the | sale to close on their other house. Selling an option on a | house you live in is a pretty terrible idea since if the market | takes off, your option gets called, you're out of a house and | into a market that's skyrocketing. | | I don't think there's enough benefit to sellers to make buying | options feasible. | devoutsalsa wrote: | Now I want to sell puts on over priced houses. | projektfu wrote: | I will buy your put on an overpriced house! | projektfu wrote: | The author buried the lede. Zillow came up with a model to choose | bid and ask prices. The model said, "Don't buy". They didn't | believe the model and chased the deal, and lost money. | | Sometimes it's better to sit on your hands. | Otternonsenz wrote: | As a current residential real estate appraiser, and coming from | being a developer for a large corporation that is very active in | this space, this has been eye opening yet unsurprising to watch | from where I sit with access to all the transactions in my area | (I service the Phoenix-Metro and outlying areas). | | In appraisal after appraisal after appraisal within the last 6-7 | months, I have watched Zillow, Opendoor, and OfferUp getting | cleaned out to the tune of losing $30,000 - $60,000 on home after | home in some neighborhoods. And in AZ, Zillow and Opendoor have | been buying and selling in this market pretty healthily the past | few years, and we're it not for themselves and the buying frenzy | of last Spring and Summer, they probably would not have gotten as | hurt here in the Valley. They got suckered into paying top dollar | in a market that was at its peak, and their algos were not | trained to deal with the human factors causing this. | | When I was working as a developer for a real estate tech company, | it was made very clear that this company, along with any other | iBuyer are able to show homes and come up with estimates is | because they have local access just like realtors, appraisers, | and developers to a Multiple Listing Service (MLS). In fact, the | company I worked for had access to every MLS in the US; They | would use the data from any of these MLSs to populate their front | end product, which would then be influenced by their data science | team to give the "estimate" based on whatever factors they deemed | appropriate. | | As someone whose job is predicated on objectively using primarily | historical (for the past year) MLS/County data to asses what the | market will allow a home to be valued at, it pains me to see | people being taken advantage of by companies like Zillow who want | to be "market makers" while not thinking through the implications | of their strategies past making money on "easy" flips. | | All this at the cost of local communities home values losing | touch with the realities of the people who are living in an area | to live, not invest. And here in Phoenix, it's only gotten worse | for anyone who doesn't already have generational or attained | wealth to find affordable housing. | | The median price as of the past few months has cooled down to | $350,000 - $400,000 for what would be considered normal for a | less-than 2,000 square foot home. But, in some areas of the | valley, it's gotten so ridiculous that a sub 2,000 sf house is | able to sell for $610,000. | | On the one hand, I can appreciate these types of companies and | business practices because they will keep me in a job making | sense of the messes they make in the micro. On the other hand in | a macro view, I hope this shakes some sense into the C-suite and | product teams of these platforms that they need to approach this | less as a "move fast, break things" type enterprise, for | themselves and the communities they impact with their choices. | bghdrmz wrote: | I feel this is happening in the automotive space. Companies like | carlots and carvana have been completely swallowing up all supply | and driving prices up well beyond fair value. | bduerst wrote: | It's definitely happening, also compounded by chip shortages | and supply chain issues. I've leased the last six years but | only in the 8 months have I had dealerships calling me with | offers to buy out my lease just to get the car back early. | alecbz wrote: | > Here's the problem: my autodraft team ended up with a roster | almost exclusively stocked with the players idiosyncratically | overrated by Yahoo!. For example, an older player whose younger | backup had just earned praise from the coach, suggesting that he | might be about to lose his job. | | I guess this is pretty obvious but just to be explicit, what's | happening I guess is that players that are "correctly" valued by | the algorithm are getting taken by others, and only the | overvalued ones are left for the algorithm to choose. | jjice wrote: | It's such a glaring red flag that one of the largest public | resources for getting pricing information on housing is also | buying and selling that housing. Come on, this is so glaringly | abusable that any teenager could tell you what's wrong. | ianferrel wrote: | And yet they lost hundreds of millions, so maybe not as | abusable as you might imagine. | lotsofpulp wrote: | Can you illustrate the mechanism of abuse? Pricing information | on housing is readily available to almost everyone, outside of | the couple stated that do not mandate it. Zillow makes it | easier, but Redfin and realtor.com and countyoffice.org and | other websites offer the same information scraped from | municipal websites. | stjohnswarts wrote: | The prinicipal of separation of concerns should be all you | need for a legal reason for keeping listing companies like | zillow from also participating in the market. Clearly they | are a company, company's only limitations are they exist to | make as much money as possible for share holders and they | have no morals, only regulations and laws limit their | actions. Therefore they shouldn't be in the business of | buying/selling houses if their main goal is to list house | values, that is a severe conflict of interest. | afterburner wrote: | Zillow could lie about regional home values and blame it on | their "secret sauce". | lotsofpulp wrote: | Why would anyone trust Zillow's opinions over anyone else's | opinion? Everyone has access to the same historical sales | data that the market actually cleared at. In fact, it is | has never been easier for the average person to research | historical sales information. They can filter the | parameters of the house they are interested in the area | they are interested and find all the previous sales data, | all while sitting on the toilet, thanks to websites like | Redfin and Zillow. | | They can "lie" all they want, it makes no difference to | what price a house sells for. | afterburner wrote: | People tell outrageous lies on Facebook all the time and | they seem to work. | | Deception works (especially subtle deception), and | laziness is a thing. | | Also, Zillow's current value estimates are about | "current" values, not past values. | lotsofpulp wrote: | Zillow's current value estimates are their opinion (or | what they want people to think is their opinion). | Regardless, it is no different than a real estate agent | or a cashier at target saying they think a specific | property is worth $x. | | At the end of the day, a buyer and seller coming together | and agreeing on a price is the only thing that matters. A | seller pays as much as they do because they do not have a | better option, and a buyer sells for as little as they do | because they have no better option. Zillow cannot affect | this. | afterburner wrote: | Perception matters. Direction and rate of value increases | in a neighbourhood matters. The perception of the | neighbourhood affects the value of a particular property. | | Zillow can affect that perception. It is making calls | about entire neighbourhoods, not just one property that | it has a declared interest in. It is acting as a supposed | uninterested party (valuing the market overall) and an | interested party (benefiting from the valuing of a | particular property). That's the potential conflict of | interest. | | How much home buying do real estate agents engage in vs | just acting as an agent, compared to Zillow (in relative | terms)? I don't know, maybe it's similar... | cloutchaser wrote: | How did opendoor manage to do the same thing better? The article | seems like a takedown of the model, but opendoor managed to do | the same thing profitably. | | From what I've read it seems Zillow never had the actual | expertise to do this, they were always a house price checking | site. On the other hand opendoor started out doing this from the | start. | ridaj wrote: | Re opendoor etc | | > A less competitive market is less dynamic and worse for | sellers, but it is better for the iBuyers that remain. | | _If_ they can avoid taking on the bad deals that Zillow was | previously shielding them from. I 've seen how in some markets | the disappearance of a provider that falls victim to this kind of | adverse customer selection merely moves the problem to other | providers in a cascading fashion. It's not clear that there are | that many profitable deals to be made on the iBuying model | buzzdenver wrote: | The author has a valid point in that the information asymmetry | will attract sellers whose property is overvalued to sell to | Zillow. I suspect though that something different happened in | reality. I live in a 70 unit condo building, so there are a lot | of very good comparables. Zillow bought one of the units about | 10% over market value, which makes me think that they're doing | some sort of market manipulation, like charging a 20% fee that is | not part of the real estate record. So they wanted to pump up | prices, but it didn't work. | civilized wrote: | In my experience, Zillow is sometimes conspicuously bad at | valuing condos and literally doesn't know their market value, | no matter how obvious it may be to you | https://news.ycombinator.com/item?id=30724925 | TimPC wrote: | It's very hard to do good real estate pricing models from raw | data. You can get all sorts of metrics on the property | statistics but one important factor in the cost of the home is | the state of renovation. Since most listings don't have a | historical listing of work done in the home your best hope of | accurately assessing this comes from something like computer | vision on the listing pictures. Assessing the quality of work, | recency of work, quality of materials and factoring that into a | house price is extremely hard. It would not surprise me at all | if Zillow paid near market value for a whole bunch of dated | homes that hadn't kept up with the times and would sell for | below the market of similar homes in the neighborhood according | to typical metrics. The stories make it seem like their model | had even more issues than that. Still I'm surprised anyone | actually tried this idea given how poor the algorithms are and | how obvious it is that key data points are not available. | buzzdenver wrote: | What was stopping Zillow from having a human look at the | property and adjust the price based on factors that their | algorithm didn't consider? | Otternonsenz wrote: | Nothing, but that would require them hiring an appraiser on | each transaction, which would be humbling for them to have | to do (and while biased as an appraiser myself, I would not | trust anyone else other than a licensed appraiser to do | that type of adjustment work, because it's a daily part of | our jobs). | | Or they could have an internal team of appraisers doing | that type of work, but the business might not like it when | the appraisers don't validate their pricing structure | because real data does not support it. | aeturnum wrote: | What stopped them is that the entire rational for Zillow's | approach is that human appraisal isn't needed. An | algorithm, they think, should be able to do a good enough | job. Any individual person who, when presented with this | scenario, thought they should have brought in a human to | look at the house does has been selected out of working for | Zillow. | chrisbrandow wrote: | How many homes did they buy? wow. | | <Quickly searches to answer question for myself> | | Oh, ~5,000/month. | LimaBearz wrote: | What gets me is even if the number was significantly smaller | the fallout effect is massive. A common argument I've heard | defending the practice is "well they didn't buy that many | homes, it was just a small portion of total sales" ...implying | that its not a big deal. | | Lets no argue the truthiness of that statement but look at it | as stated. They buy one house within a 10-20 mile radius away | from you and they do so aggressively paying 20-30%+ over the | pre-bubble price (think early pandemic times when prices were | more realistic then they are now) | | Well now thats the anchor price on comps for the next guy just | looking to sell his house. Rinse and repeat a few times with | anchored expectations on an inflated value and we have runaway | prices. | bduerst wrote: | That's because real estate pricing is fixed to nearby | inventory. Zillow doesn't have to buy many homes in a | neighborhood to inflate the prices of all the homes, it just | needs to buy 1 or 2. | vanilla_nut wrote: | It at least gives me hope that if regulation and profit | margins push corporate buyers OUT of the market, we can | return to sanity and I can someday own a home. | | But given this country's history of regulating giant | corporations... more likely we'll just do nothing until | homelessness balloons even more and the vast majority of | homes are corporate owned. Then we'll have to wait for a VC | bubble burst before they start selling all of the homes and | tank the market. | sys_64738 wrote: | I thought the Zillow webpage was simply to guesstimate the cost | of houses. This whole scenario sounds like they were totally out | of their core competency zone. | ilamont wrote: | _Any time that you're working with imperfect knowledge and trying | to operate a business on a large scale, you're likely to run into | this kind of trouble._ | | Can we admit that this is a major problem with the "AI" search | algorithms operated by Google, Amazon, and others? | | They are assigning "value" to content, or books, or whatever | based on an incomplete understanding of the market. It's made | even worse because so many owners are able to game the system. | Finnucane wrote: | "In the real estate industry, this service is called iBuying, " | | Also, 'flipping.' | dopamean wrote: | I dont really think anyone would call the business models of | Opendoor, Offerpad, and formerly Zillow "flipping." Yes, they | did buy a house with the intent to sell it but imo the term | flipping refers to a much, much smaller scale business that | also includes fixing up the property in some way. That is not | what iBuyers do. | Finnucane wrote: | Buying a house to make a short-term profit on the resale is | flipping. You can cover it up with some marketing tech-biz | baloney, but it is still flipping flipping. | Otternonsenz wrote: | Agreed. | | In my local Multiple Listing Service, it can show you all | deed history for a given property, it is most certainly | labeled as a flip if anyone - iBuyer or no - buys and then | sells within a short period of time, even if they don't | make profit. The intention is understood by all market | participants. | dpierce9 wrote: | Anecdote on the estimates. We bought a house for X and renovated | it. The day before we listed it both Zillow and Redfin estimate | had an estimate around the purchase price X. When we listed it | for 2X, both companies changed their estimate to be close to the | listing. However, Redfin changed the entire price history as well | showing a gentle slope. Zillow preserved their previous history | and showed a spike. | turkishmonky wrote: | Another anecdote - We sold a house in late 2020, decided to get | an offer through zillow first, since we had a newborn and | staging would have been a hassle. | | Zillow lowballed us 10% under their zestimate, and still tacked | on an 8% fee - we ended up going with a realtor instead, and | ended up getting 15% over the Zestimate, with a 6.5% fee. | double0jimb0 wrote: | Noticed the same, but I still think Zillow tweaks historical | but just not as brazenly as Redfin. | harikb wrote: | +1 I have always been annoyed by Redfin's rewrite of history. | At least have the decency to show two lines (original | prediction for last year and how it turned out to be). | ct0 wrote: | This happens all the time with most data providers. | creaghpatr wrote: | Same, I find this to be a bizarre practice. What's the point | if the snapshots are revised? | notahacker wrote: | I assume the rationale is that it's are supposed to be an | indicator of the actual value of the property at a point in | time, not the accuracy of their algorithm at that point in | time. So if they update with new information, it's assumed | that instead of the price suddenly jumping (which looks | very odd if you're trying to understand a local property | market), the original snapshots are assumed to have been | wrong | projektfu wrote: | I am guessing they don't save the price history as snapshots. | They have the current estimate, and then they walk it back in | time from the market averages. | el_benhameen wrote: | At least in my area, they've completely given up on providing | a "historical" estimate of the house in question and just | have a trend graph for the general area. I assume this data | is also heavily massaged, too, though. | echan00 wrote: | How do you lose money in a market where homes only went up? | JKCalhoun wrote: | They pretty much lay it out in the article. Essentially they | end up with the "lemons" and then have to pay to hold them | until they sell. | colinmhayes wrote: | The only offers they made that were accepted were the ones on | shitty houses that their algorithm mispriced. | advisedwang wrote: | The point of the article is the answer to this: they were | systematically overpaying because the offers where they | overestimate value were disproportionately taken up by sellers. | | But also there's the cost of inspection, property insurance, | title insurance, escrow fees, labour costs of making the sale | etc. As the article says, trading houses is not like trading | stocks. | prototypeasap wrote: | I recall reading months ago that Zillow made cash offers with | inspections waived, in order to expedite the process. I believe | they had an algo which would access average repair cost which | they would factor in the actual offer. | | Each house needs to be inspected by multiple experts as there are | many toxic properties with huge liabilities. | ridgered4 wrote: | If I was stuck in a toxic house that I couldn't afford to fix | that Zillow no contingency offer would be like a literal dream | come true! ___________________________________________________________________ (page generated 2022-03-18 23:00 UTC)