All Encompassing Mortgage and Real Estate Thread

[Texas Jeff 1945]

1 hour ago, Dbeasy said:

Does anyone understand the recent and future proposed Austin Single family zoning changes? I’ve tried to find them on the web but the City of Austin just shows Access Denied on their website. 

it is my understand they made changes in 2019/2020 to allow more density, and are about to do it again  

 

The recent proposal was to reduce the minimum lot size from around 5000 sq ft to around 2500 sq ft, allow three houses to be built on each lot, and for those lots that do, consider reducing lot setbacks or impervious cover or McMansion restrictions or required parking.  Here's an article:

https://www.austinmonitor.com/stories/2023/07/council-considers-code-amendments-to-relax-single-family-zoning-rules/

So, someone could in theory buy an existing home on a 50x100 lot, tear it down, subdivide it, and build six homes, IMHO apartments, on the site.  The could also build less density, like one house per 2500 sq ft lot, or just rebuild on the lot like today.  Portland up-zoned a few years ago and has some of this stuff going up today.

The council did not pass these rules, but directed the city to come back with proposals for change.  Unlike CodeNext, these proposals would affect every single family lot in the city by changing the definition of single family zoning.  This is not "missing middle", where some lots near transit were considered for up-zoning while inner neighborhood house were spared.  This would be the rules for any single family lot in the city.

There are devils in the details.  For example, historic zoning is probably not affected, nor places like Mueller that have a special overlay, nor places with HOAs that have rules against this stuff, nor places with deed restrictions ... so long as the owners next door are willing to pay to fight for the deed restriction in court.  The HOA would possibly have to fight the developers to enforce the HOA rules and those without an HOA would probably have to organize more one-on-one.

This is great for builders and realtors, since they get to sell a house six times ... great for investors who can build out a lot and then rent out the apartments ... great for young, high tech folks looking for a place that they can use for WFH on Mon/Fri and drive to the office for a few hours on Tue/Wed/Thu.  Not as great for neighbors who have to live next to a giant building with the extra cars, A/C units, trash cans.  This will not create affordable housing for teachers.  Expect the normal arguments from all three sides of the issue: those for it, those against it, and those that will profit from it.

In the end, nobody's riding Cap Metro -- it's all cars and WFH, poor families will continue moving to Pflugerville and Hutto, Austin ISD will continue to shrink, and the city council will continue to ignore Robinson Ranch.  But hey, I could be wrong.

[LTtxfan 49147]

2 hours ago, Dbeasy said:

Does anyone understand the recent and future proposed Austin Single family zoning changes? I’ve tried to find them on the web but the City of Austin just shows Access Denied on their website. 

it is my understand they made changes in 2019/2020 to allow more density, and are about to do it again  

 

Have a friend selling an older home, corner lot in South Austin.  Said new rules now will allow 3 condos to be built on the property instead of just 2 condos.

Also maybe these folks may be able to help:

https://communityimpact.com/austin/central-austin/city-county/2023/07/21/council-moves-to-allow-more-housing-in-single-family-zones-across-austin/#:~:text=1 Cutting the minimum lot size required for,bring more “flexible housing configurations” to single-family zoning

 

Edited September 26, 2023 by LTtxfan

[We’reTexas 1473]

1 hour ago, Texas Jeff said:

So, someone could in theory buy an existing home on a 50x100 lot, tear it down, subdivide it, and build six homes, IMHO apartments, on the site.  The could also build less density, like one house per 2500 sq ft lot, or just rebuild on the lot like today.  

The council did not pass these rules, but directed the city to come back with proposals for change.  Unlike CodeNext, these proposals would affect every single family lot in the city by changing the definition of single family zoning.  This is not "missing middle", where some lots near transit were considered for up-zoning while inner neighborhood house were spared.  This would be the rules for any single family lot in the city.

😍

[Dbeasy 15042]

Thanks for the input. I don’t understand why I can’t find this zoning information on the Austin website. It’s ridiculous. 

[CooterBrown 18004]

We will see more houses like in Crestview where there are two standalone houses on a single lot...one in front and one in back.  Instead of one $1M house, there are now 2 $800K houses (free standing condos) and if they're lucky, joint ownership of the lot and driveway.  Smart developers will just lease the land and have a mandatory condo association fee that they are paid in perpetuity. 

 

Edited September 26, 2023 by CooterBrown

[South Austin 52457]

2 minutes ago, CooterBrown said:

We will see more houses like in Crestview where there are two standalone houses on a single lot...one in front and one in back.  Instead of one $1M house, there are now 2 $800K houses (free standing condos) with joint ownership of the lot and driveway.  Smart developers will have a mandatory condo association fee that they are paid in perpetuity. 

I've been seeing this all over Brentwood since I moved to the neighborhood at the end of 2019.  Depending on the lot size, or if a developer can combine two adjacent lots, some developers will put 4, 8, or even 10 detached units on a lot.

[CooterBrown 18004]

Just now, South Austin said:

I've been seeing this all over Brentwood since I moved to the neighborhood at the end of 2019.  Depending on the lot size, or if a developer can combine two adjacent lots, some developers will put 4, 8, or even 10 detached units on a lot.

I am hoping this causes a premium on my own lot when we sell and GTFO to Colorado.  I have a decent size lot in Allandale...80x130, that's perfectly flat and only has a single small Monterrey Oak in the front yard.  It's easily buildable up to maximum allowances with no heritage trees to get in the way. Let the developers get in a bidding war!

[South Austin 52457]

3 minutes ago, CooterBrown said:

I am hoping this causes a premium on my own lot when we sell and GTFO to Colorado.  I have a decent size lot in Allandale...80x130, that's perfectly flat and only has a single small Monterrey Oak in the front yard.  It's easily buildable up to maximum allowances with no heritage trees to get in the way. Let the developers get in a bidding war!

I don't drive through Allendale all that much, but are you seeing the multiple-home lots in that neighborhood like Brentwood?  Seems like for whatever reason when you get to the west side of Burnet there's still the predominance of single-home lots in places like Rosedale and Shoalmont.  

[CooterBrown 18004]

8 minutes ago, South Austin said:

I don't drive through Allendale all that much, but are you seeing the multiple-home lots in that neighborhood like Brentwood?  Seems like for whatever reason when you get to the west side of Burnet there's still the predominance of single-home lots in places like Rosedale and Shoalmont.  

There are none.  Zoning in Crestview/Brentwood currently allow it but Allandale does not.  This new rule would allow it. I'm sure all our NIMBYs will be up in arms but unless they want to foot a legal bill, they will have to bend over and take it.  Our POA is optional and only $20 a year. There's no money there to fight anything.  I know some people wanted to fight a new construction last year and they learned the POA can't enforce deed restrictions. It has to be an individual neighbor that files the suit and the POA told them it needs to be a neighbor in the same section in proximity to the property.  Just being in the same neighbor tens blocks away isn't enough.  They gave up when no one would commit money to the legal fund.

 

Edited September 26, 2023 by CooterBrown

[Bozo_Casanova 26437]

9 hours ago, Texas Jeff said:

This is great for builders and realtors, since they get to sell a house six times ... great for investors who can build out a lot and then rent out the apartments ... great for young, high tech folks looking for a place that they can use for WFH on Mon/Fri and drive to the office for a few hours on Tue/Wed/Thu.  Not as great for neighbors who have to live next to a giant building with the extra cars, A/C units, trash cans. This will not create affordable housing for teachers.  Expect the normal arguments from all three sides of the issue: those for it, those against it, and those that will profit from it.

In the end, nobody's riding Cap Metro -- it's all cars and WFH, poor families will continue moving to Pflugerville and Hutto, Austin ISD will continue to shrink, and the city council will continue to ignore Robinson Ranch.  But hey, I could be wrong.

Edited September 26, 2023 by Bozo_Casanova

[South Austin 52457]

18 minutes ago, CooterBrown said:

There are none.  Zoning in Crestview/Brentwood currently allow it but Allandale does not.  

Ah, got it.  I assumed there was a different zoning in Shoalmont, but wasn't sure about Allandale.  

[Bozo_Casanova 26437]

29 minutes ago, CooterBrown said:

There are none.  Zoning in Crestview/Brentwood currently allow it but Allandale does not.  This new rule would allow it. I'm sure all our NIMBYs will be up in arms but unless they want to foot a legal bill, they will have to bend over and take it.  Our POA is optional and only $20 a year. There's no money there to fight anything.  I know some people wanted to fight a new construction last year and they learned the POA can't enforce deed restrictions. It has to be an individual neighbor that files the suit and the POA told them it needs to be a neighbor in the same section in proximity to the property.  Just being in the same neighbor tens blocks away isn't enough.  They gave up when no one would commit money to the legal fund.

 

There's three things involved here:

1) Zoning - Zoning in Crestview/Brentwood currently sort of allow subdivision and ADUs but Allandale does not. 
2) Deed restrictions - there are deed restrictions in Allendale that prohibit subdivision, and in most cases it is also prohibited in Crestview and Allendale, but the city is not a party to those deed restrictions. 
3) State law - because the city is not a party to the deed restrictions the city MUST record subdivisions of legally platted lots in accordance with the zoning on that site, so to your point, it's up to the neighbors/POA if they want to get froggy.

That said - Austin is an outlier in terms of minimum lot size and compatibility triggers as of 1984, and those are the two biggest structural contributors to the housing shortage that took us from the most affordable city in Texas to the least. When we think about Hyde Park, for example, all the things that make it Hyde Park - neighborhood retail, 4-8 unit apartment buildings and duplexes mixed into blocks of single family homes, Victorians next to tract houses and a huge variety of lot sizes - those things are, under current code, all illegal. And in point of fact there are thousands of legally platted lots that were never developed all over the city but especially in HP, Bouldin Travis Heights etc that are currently somebody's huge side/back yard because they cannot be developed.  So in some ways the work here is to take the code back to where it used to be and let Austin be like Austin again. 
If the minimum lot size is reduced defacto by the upcoming changes and the compatibility trigger is reduced, you'll see a lot more housing created that will filter into median income market rate affordability, @Texas Jeff's parade of horribles notwithstanding. 

 

Edited September 26, 2023 by Bozo_Casanova

[Neonmoon 38129]

We need more inventory. Building more supply and changing zoning laws is the only way to help reduce home prices. 

 

 

[Bozo_Casanova 26437]

30 minutes ago, Neonmoon said:

We need more inventory. Building more supply and changing zoning laws is the only way to help reduce home prices. 

It's the only meaningful tool the city has. Higher top marginal personal income tax rates and normalized 30 year interest rates in the 5-7% can help. But it will take decades to realign median income and median home price in any growing city, particularly Austin. The only quick fix would be a change to the demand signal, i.e. a deep local or regional recession, which at this point doesn't look likely except/until triggered by climate change.

Edited September 26, 2023 by Bozo_Casanova

[DefinitelyNotHollywoodColt 12301]

36 minutes ago, Bozo_Casanova said:

It's the only meaningful tool the city has. Higher top marginal personal income tax rates and normalized 30 year interest rates in the 5-7% can help. But it will take decades to realign median income and median home price in any growing city, particularly Austin. The only quick fix would be a change to the demand signal, i.e. a deep local or regional recession, which at this point doesn't look likely except/until triggered by climate change.

It's going take awhile to trickle down?

[Bozo_Casanova 26437]

1 hour ago, DefinitelyNotHollywoodColt said:

It's going take awhile to trickle down?

That's cute and I hear that a lot,  unlike the total bullshit of trickle down economics, where borrowed money winds up inflating asset values in the hands of the people at the top, the phenomenon of filtering in housing is very real. In a modern context (unlike, say, the 40's-90's because they were building for the inner ring most of the time) we can observe conclusively that depreciation of housing stock alone cannot over come a supply imbalance. Thus, an existing unit of housing within a radius of around a 15-20 minute commute to work will price towards higher incomes with a shortage over time because of the relatively lower incomes of competing buyers, and towards lower incomes when housing creation keeps pace the inflow of demand over time because of the availability of relatively more attractive competing units of housing. 
Austin is a fantastic example of this - In the 1960s-70's new construction in Northwest Hills, Highland Park (Austin), Allendale, and Windsor Park etc flattened the appreciation of housing in Tarrytown, Pemberton, Brykerwoods, Rosedale, French Place etc and brought older and more modest units in those areas into the reach of relatively lower income people because those places were just 5 more minutes to get downtown or UT, IBM etc.
In the 2000-2020's, virtually all housing creation was in Suburbs outside that commute window. So the time value of money pushed the signal in the other direction, incentivizing more affluent people into lower income areas like East Austin, and pushing the price of already affluent income areas into even higher wealth ranges. Meanwhile, incumbent East Austin residents moved to Pflugerville, and South Austin residents moved to Buda/Hays, having been effectively priced out of the city and paying for it in the form of commuting hours. 

Understand the meaning of this chart and you understand why we you can't sprawl your way out of a housing shortage:

Edited September 26, 2023 by Bozo_Casanova

[Sam Lin 3551]

How do you interpret that as not being able to sprawl your way out of a shortage?

[We’reTexas 1473]

4 hours ago, Bozo_Casanova said:

 

[Bozo_Casanova 26437]

1 hour ago, Sam Lin said:

How do you interpret that as not being able to sprawl your way out of a shortage?

See, your mistake was not understanding the meaning of the chart first. There's a thing that has come to be known as the Marchetti Constant, which is the observation that there seems to be an "anthropological invariant" that most people are willing to spend up to 30 mins each way commuting and by implication the stuff inside that circle is substitutional but outside the bubble it is not. So as you introduced new technologies, cities were able to expand, but beyond that point the model breaks down and exerts economic pressure on the distance. 

So, for example, a teacher will think about the calculus of their job in terms of the cost of the commute. They might keep teaching at Lee elementary as long as they can afford to rent in in Allendale but if they buy a house in Leander or Hutto they will think about changing jobs

Edited September 26, 2023 by Bozo_Casanova

[BabaYaga 15289]

2 hours ago, Bozo_Casanova said:

See, your mistake was not understanding the meaning of the chart first. There's a thing that has come to be known as the Marchetti Constant, which is the observation that there seems to be an "anthropological invariant" that most people are willing to spend up to 30 mins each way commuting and by implication the stuff inside that circle is substitutional but outside the bubble it is not. So as you introduced new technologies, cities were able to expand, but beyond that point the model breaks down and exerts economic pressure on the distance. 

So, for example, a teacher will think about the calculus of their job in terms of the cost of the commute. They might keep teaching at Lee elementary as long as they can afford to rent in in Allendale but if they buy a house in Leander or Hutto they will think about changing jobs

Well, the mistake of this chart is that it's old, and doesn't factor in the significant spike in remote/WFH jobs rapidly accelerated over the last few years. 

[Bozo_Casanova 26437]

9 minutes ago, BabaYaga said:

Well, the mistake of this chart is that it's old, and doesn't factor in the significant spike in remote/WFH jobs rapidly accelerated over the last few years. 

And yet, the behavior holds. So, given that remote work is correlated with income, are you saying that commuting is no longer a factor in real estate prices? Or that people are suddenly happy to spend more than an hour commuting? Or are you teeing up one of those death of the cities predictions I hear periodically, where Austin dies because John Galt is terrified by that one homeless person he saw on Braker lane and decides to move out to Liberty Hill and work from home?

[BabaYaga 15289]

1 minute ago, Bozo_Casanova said:

And yet, the behavior holds. So, given that remote work is correlated with income, are you saying that commuting is no longer a factor in real estate prices? Or that people are suddenly happy to spend more than an hour commuting? Or are you teeing up one of those death of the cities predictions I hear periodically, where Austin dies because John Galt is terrified by that one homeless person he saw on Braker lane and decides to move out to Liberty Hill and work from home?

No, I'm saying commuting is becoming less and less of a factor.  See the mass exodus to the sprawling developments in Prosper, Celina, Gunter, etc.  A significant number of those people never have to leave their house for work.  I'm working with a developer on 50+ homes in Van Alstyne.  Per the builder one of the big reasons to take a chance on these lots is the demand.  Assuming some work in Sherman and do commute, that's still 20+ miles each way.  His office is in Dallas, so most are learning about this from the northern DFW market and are more than happy to move so damn far up there based upon the contracts already signed.  

This circles back to the claim that you can't build your way out of a shortage of homes.  Of course you can now that so many employers are embracing WFH and the concerns about commute times are less relevant for certain sectors of the economy.

[Bozo_Casanova 26437]

12 minutes ago, BabaYaga said:

No, I'm saying commuting is becoming less and less of a factor.  See the mass exodus to the sprawling developments in Prosper, Celina, Gunter, etc.  A significant number of those people never have to leave their house for work.  I'm working with a developer on 50+ homes in Van Alstyne.  Per the builder one of the big reasons to take a chance on these lots is the demand.  Assuming some work in Sherman and do commute, that's still 20+ miles each way.  His office is in Dallas, so most are learning about this from the northern DFW market and are more than happy to move so damn far up there based upon the contracts already signed.  

This circles back to the claim that you can't build your way out of a shortage of homes.  Of course you can now that so many employers are embracing WFH and the concerns about commute times are less relevant for certain sectors of the economy.

Sure, less. About 12% of the population can work remotely full time and an additional third can do it at least some of the time. I'm not saying there's no demand for sprawl housing and some people (myself included, actually, at a different moment in my life) like living in the suburbs more than the city.
I did not say you couldn't build your way out of a housing shortage. Of course you can. You have to build! I said you can't sprawl your way out, because at some point it stops being one place and starts being two different places. Sprawl housing is not a  substitutional good for close-in housing and commuting is a big reason why, as is the various amenities and city services available in the urban core, the biggest of of which is not being stuck in traffic all the time. So the creation of a unit of housing in Sherman does not exert material downward pressure on the cost of an equivalent home in Lakewood Heights, but the price of homes in Central Dallas does pull the price of housing in Sherman up and down. 

That doesn't even seem controversial. 

Edited September 26, 2023 by Bozo_Casanova

[Sam Lin 3551]

I'm still not getting how you interpret that chart as inability to sprawl. Of course commute is a factor for people. But as other variables become weighted differently, as does commute.

[ChickenSandwich 9829]

How do you force developers to build $300k homes for the middle and working class when property tax rates and current land values, city regulation/permitting etc make this impossible?

As seen in Chicago and Minneapolis (upzone adopters), developers are building more and more expensive properties to maximize profit, not provide housing for the working and middle class. In some cases rents have risen instead.   

Where has upzoining succeeded in creation of middle to lower middle income home supply?  $200-$300k housing?  
 

Transportation challenges seem like an easier problem to tackle with technology etc. than trying to force density. Density drives land values through the roof and have you chase higher and higher “affordable housing” instead of building in abundance on cheap land. 
 

LA wanted to provide permanent housing for homeless individuals 

“Most of the units are studios or one-bedroom apartments. The audit found 14% of the units build exceeded $700,000 each, and one project in pre-development is estimated to cost almost $837,000 per unit.”

Austin is of course not this extreme but the same economics exist 

[Texas Jeff 1945]

11 hours ago, Bozo_Casanova said:

 @Texas Jeff's parade of horribles notwithstanding. 

Hey, if it were up to me we would be up-zoning the areas closest to transit, particularly close to the rail system and close to the 801/803 lines.  Think of the university overlay extended north and south.  Lots of 8-20 story towers with everything you need along the rail route.  A train that goes all the way to the airport.  Two or three neighborhoods in the Robinson ranch filled with towers with Red Line trains connecting them every five minutes.  Stations that are protected from the elements so that it's possible to wait for a train when it's 105 outside or raining.

I'd rather do that than put small apartment complexes in residential neighborhoods, but I understand why developers want density.  Just my opinion.

[Bozo_Casanova 26437]

5 minutes ago, Texas Jeff said:

I'd rather do that than put small apartment complexes in residential neighborhoods, but I understand why developers want density.  Just my opinion.

Not just developers. A plurality of voters in the last two council elections. 

 

1 hour ago, ChickenSandwich said:

How do you force developers to build $300k homes for the middle and working class when property tax rates and current land values, city regulation/permitting etc make this impossible?

As seen in Chicago and Minneapolis (upzone adopters), developers are building more and more expensive properties to maximize profit, not provide housing for the working and middle class. In some cases rents have risen instead.   

Where has upzoining succeeded in creation of middle to lower middle income home supply?  $200-$300k housing?  

It took decades to create this crisis and will take decades to make meaningful progress. 

[Neonmoon 38129]

1 hour ago, ChickenSandwich said:

How do you force developers to build $300k homes for the middle and working class when property tax rates and current land values, city regulation/permitting etc make this impossible?

As seen in Chicago and Minneapolis (upzone adopters), developers are building more and more expensive properties to maximize profit, not provide housing for the working and middle class. In some cases rents have risen instead.   

Where has upzoining succeeded in creation of middle to lower middle income home supply?  $200-$300k housing?  
 

Transportation challenges seem like an easier problem to tackle with technology etc. than trying to force density. Density drives land values through the roof and have you chase higher and higher “affordable housing” instead of building in abundance on cheap land. 
 

LA wanted to provide permanent housing for homeless individuals 

“Most of the units are studios or one-bedroom apartments. The audit found 14% of the units build exceeded $700,000 each, and one project in pre-development is estimated to cost almost $837,000 per unit.”

Austin is of course not this extreme but the same economics exist 

You’re not wrong. If you allow people to build density, the money making people will just try to build more dense expensive shit. That doesn’t mean there isn’t a solution to this issue. Some cities require a certain amount of apartment units to be 80% AMI affordable. It’s a token amount so it’s not going to move the needle, but the point I’m trying to make is creating solutions is much better than allowing the NIMBY crowd to kick and scream until everyone stops trying. There is a similar issue with mass transit 
 

 

[Dbeasy 15042]

Some terrific comments and insights here. I just spent the last two days digging thru the zoning changes, talking with architects, developers, construction crews, other realtors, and driving thru (again) several neighborhoods going thru redevelopment. 

This change is pretty dramatic. I’ll be listing some homes in the next few months that would be impacted by all this, so I’ve developed some strategies for helping sellers get max value from their sale.

I’m also now looking at it from the buyer side as an investor to  put together some investments in the market over time. 

It’s not a given that this will actually create much more affordable housing, but theoretically it should help. The opposing view is the trampling of personal property rights. And it would suck having a 9 unit mini-condo complex going up on your next door neighbor’s lot that was scraped. Because that could theoretically happen to most single family houses in Austin from what I understand.

[LTtxfan 49147]

Unfamiliar so had to look up NIMBY

"Not In My Back Yard"

Hope that helps someone else  😁

[Texas Jeff 1945]

4 hours ago, BabaYaga said:

No, I'm saying commuting is becoming less and less of a factor.

In the tech industry, I would say commuting is no longer a factor.

I work downtown-adjacent, near Mopac and 6th.  I have an easy drive to the office.  My office is empty on Mondays and Fridays, and mostly on Wednesday.  I could collect 24 monitors on my desk and no one would notice.  Tuesdays and Thursdays are "work from the office" days, but most employees come in around ten and leave around three to avoid traffic, and work the rest of the time at home.  No one drives during "commuting" hours.  Before COVID we were in office Mon-Fri, eight hours a day.

Most of my co-workers have kids in school, and would never consider putting their kids in Austin ISD.  They live in Hays, Dripping Springs, Steiner Ranch, Leander, Round Rock, etc.  My company would get better in-office attendance if we had smaller offices in the suburbs, and even then I doubt people would be there more than 8-12 hours a week.

Personally, I'd like to see more people in person but I am clearly in the minority, and I think this is the new way of working in tech.  If Austin is going to be a tech town, I think commuting traffic is a diminishing problem.  Great for the environment, but (in my opinion) not great for collaboration, but hey what do I know.

Now, we do have new college grads that come from all over.  Our northern transplants just went through their first summer and they're a little shell shocked.  The new grads pretty much want to live wherever the other young people live.  And right now that's the Domain, East Austin, apartments in South Austin, a few live downtown.  They don't want to come to the office either, but they do want to live near other young, childless people.

Those are the people that will buy or rent these apartments in neighborhoods.  They can out-spend any teacher, or first responder, or poor family of four.  They do not think that Austin is expensive.  Companies are moving them here because it's cheaper to park them here than in Silicon Valley.

For my industry, commuting is dead.

[LebongJames 1791]

On 9/24/2023 at 2:50 PM, Wulaw Horn said:

Or- we could build more houses. 

This, as a SF sub contractor every builder has been skittish since 2007. We are millions behind on new homes being built. We built 1.71 million in 2021, 1.4 million in 2022 and are on pace for 1.2 -1.3 this year. We consistently as a country built over 2 million houses per year in the 90s. Between 2008 and 2013 we didn’t surpass 1 million starts. 
 

About 70% of new starts are SF and the other 30% are MF. This is higher than previously but probably not enough.

Considering where homeowners sit with equity and not planning on moving we need to build around 2 to 2.2 units every year for the next few years. We are bout 3.8 million units behind in the US. This would also drive more home ownership because we know most affordable housing in major MSA’s is new construction.

[Wulaw Horn 19068]

6 hours ago, LebongJames said:

This, as a SF sub contractor every builder has been skittish since 2007. We are millions behind on new homes being built. We built 1.71 million in 2021, 1.4 million in 2022 and are on pace for 1.2 -1.3 this year. We consistently as a country built over 2 million houses per year in the 90s. Between 2008 and 2013 we didn’t surpass 1 million starts. 
 

About 70% of new starts are SF and the other 30% are MF. This is higher than previously but probably not enough.

Considering where homeowners sit with equity and not planning on moving we need to build around 2 to 2.2 units every year for the next few years. We are bout 3.8 million units behind in the US. This would also drive more home ownership because we know most affordable housing in major MSA’s is new construction.

I think we need to build more like 3M a year for the next decade. The new home donations are way up with our demographic curve. 2M probably only sort of keeps pace- we need to kick that up a notch to actually catch up to what we are behind. 

[BabaYaga 15289]

13 hours ago, ChickenSandwich said:

How do you force developers to build $300k homes for the middle and working class when property tax rates and current land values, city regulation/permitting etc make this impossible?

Condo maps - specifically what developers are looking at now are apartment conversions.  I was working with a developer here in the metroplex.  They were eyeing a bid on a complex for $73M and roughly 380 units of various sizes and a cap rate of less than 5%.

The general idea is to approach the city for zoning leniency and get the map approved for a condo conversion.  Many of those units were in the $300K range and the tenants are given first right of refusal and special financing options in the way of DP assistance (similar to what CA did - Dream for All) so displacement is less of an issue.

Developers have billions tied un in rentals right now that many would take a small loss on to get out from under.  If they could facilitate these conversions it would solve two big problems - available housing for the community and available capital for the investors.

[LebongJames 1791]

5 hours ago, Wulaw Horn said:

I think we need to build more like 3M a year for the next decade. The new home donations are way up with our demographic curve. 2M probably only sort of keeps pace- we need to kick that up a notch to actually catch up to what we are behind. 

I agree but I don’t think we are going to all of sudden double starts. 2.2 million seems like a crazy stretch currently.

[BabaYaga 15289]

59 minutes ago, LebongJames said:

I agree but I don’t think we are going to all of sudden double starts. 2.2 million seems like a crazy stretch currently.

Yep - not enough qualified demand.  Nobody can afford higher rates and DP's on increasing home values when everything else in their lives also costs more.  

[Wulaw Horn 19068]

Always nice when you get not one but two reprice for the worse notices before lunch is done. And on a day we started out up 20 basis points first thing no less. 
looks like closer to 8 than 7. I was told at this time we should be sub 6.  

[Neonmoon 38129]

September has suuuucked

 

 

[Bozo_Casanova 26437]

15 hours ago, Dbeasy said:

It’s not a given that this will actually create much more affordable housing, but theoretically it should help. The opposing view is the trampling of personal property rights. And it would suck having a 9 unit mini-condo complex going up on your next door neighbor’s lot that was scraped. Because that could theoretically happen to most single family houses in Austin from what I understand.

Well two things - first, it's not like everyone is going to do that, because a homeowner would have to give up their home for it to happen, so change will be very gradual (see Minneapolis). Second, and more importantly, drive through Hyde Park and you see countless examples of 6-8 unit buildings mixed in with Victorians. Or Mueller, for that matter.  It's just nothing to really be afraid of in practice. 

2 hours ago, LebongJames said:

I agree but I don’t think we are going to all of sudden double starts. 2.2 million seems like a crazy stretch currently.

Yep, we really missed an amazing opportunity with the cost of capital over the last 20 years, because of zoning. 

[UTPhil2006 3806]

On 9/21/2023 at 8:04 AM, Esque said:

For real... and I don't even follow bonds.  Spiked last night and woke me up with an alert.  Wonder if we clear 4.50% on the US10Y today.

Just passed 4.6

[Wulaw Horn 19068]

Absolutely nothing should have moved the market. Opened up 20 bips good. Down 70 since then. 50 on the day!  
wake up tomorrow to 7.6 or so as the rate for your A borrowers. Good stuff!  

[Dbeasy 15042]

Man there’s a crazy bond guy I’ve been following for about a year and a half now and he has been dead accurate on where interest rates are headed. He says the 10 year tops out between 5-5.5. Has consistently said this for awhile. 

[Neonmoon 38129]

17 hours ago, Wulaw Horn said:

Absolutely nothing should have moved the market. Opened up 20 bips good. Down 70 since then. 50 on the day!  
wake up tomorrow to 7.6 or so as the rate for your A borrowers. Good stuff!  

pricing in the government shutdown? 

[Esque 135]

1 hour ago, Neonmoon said:

pricing in the government shutdown? 

Dot plot was updated and Fed pushed the two projected rate cuts in 2024.  Market is having to come to terms with higher for longer.  Remember that less than 6 months ago the market thought the Fed was going to cut 50 bps by year end 2023.  The reality is no one actually knows with a certainty, but market is having to adjust on current information, which means US10Y should continue to trend towards 5.00%.

Private investors are loading up on long duration treasuries at the moment, which is helping them catch a bid / keep the rates down, relatively speaking.  But Treasury still going to dump a lot more in the market.  Curious / concerned where the demand comes from in say November / December as they push to fill up the government's piggy bank.

[Neonmoon 38129]

18 minutes ago, Esque said:

Dot plot was updated and Fed pushed the two projected rate cuts in 2024.  Market is having to come to terms with higher for longer.  Remember that less than 6 months ago the market thought the Fed was going to cut 50 bps by year end 2023.  The reality is no one actually knows with a certainty, but market is having to adjust on current information, which means US10Y should continue to trend towards 5.00%.

Private investors are loading up on long duration treasuries at the moment, which is helping them catch a bid / keep the rates down, relatively speaking.  But Treasury still going to dump a lot more in the market.  Curious / concerned where the demand comes from in say November / December as they push to fill up the government's piggy bank.

Kind of thought that was priced in last week. But I guess it's just continuing this week. 

[UTPhil2006 3806]

On our way to 4.7 today 

[Wulaw Horn 19068]

3 hours ago, Neonmoon said:

Kind of thought that was priced in last week. But I guess it's just continuing this week. 

It should have been. I’m telling you- nothing made yesterday happen except psychology and momentum. 

[LCHorn 2615]

4 hours ago, Wulaw Horn said:

It should have been. I’m telling you- nothing made yesterday happen except psychology and momentum. 

Care to speculate on today's reversal?  What a weird week.

[UTPhil2006 3806]

2 minutes ago, LCHorn said:

Care to speculate on today's reversal?  What a weird week.

[Neonmoon 38129]