tag:blogger.com,1999:blog-1110014885778996459.post743604972867704539..comments2024-03-28T01:12:29.954-07:00Comments on Idiosyncratic Whisk: Housing: Part 165 - The homebuilding recovery may lag the price recoveryKevin Erdmannhttp://www.blogger.com/profile/07431566729667544886noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-1110014885778996459.post-35005384875087776112016-07-07T19:42:36.447-07:002016-07-07T19:42:36.447-07:00Yeah. Those sorts of details really complicate th...Yeah. Those sorts of details really complicate this sort of thing at the micro level.<br /><br />Let me know what you find on the tax consequences. I'm interested in what you might end up thinking about it.Kevin Erdmannhttps://www.blogger.com/profile/07431566729667544886noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-70628163284955186372016-07-07T19:08:33.755-07:002016-07-07T19:08:33.755-07:00Makes sense. I've been looking into low end le...Makes sense. I've been looking into low end leveraged rental housing for a while now I just need to figure out how the taxes work. Thanks for the response Kevin!Noah Manfredinoreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-50688442064533568242016-07-06T22:56:43.844-07:002016-07-06T22:56:43.844-07:00Unfortunately, even that effect (volatility of hom...Unfortunately, even that effect (volatility of home prices in Closed Access cities), will also been interpreted as more proof that high home prices are a "bubble". But, the decline in prices will be the product of reduced expectations of real economic growth which lower the demand for Closed Access housing among aspirational workers. So, the result will lead, depressingly, to more calls for self imposed stagnation.<br /><br />I hope it doesn't happen, but it seems like a good bet.Kevin Erdmannhttps://www.blogger.com/profile/07431566729667544886noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-40588878345838223202016-07-06T22:48:49.105-07:002016-07-06T22:48:49.105-07:00Rents will go up. I have seen some reports of a r...Rents will go up. I have seen some reports of a recent pullback at the top end of the San Francisco market. If that continues, it could be a sign that Fed tightening has already been enough to start to pull things down. Since the low end of the market already has very high liquidity premiums embedded in home prices, I doubt that it will go down much. That's why I think low end leveraged rental housing is a good place to be right now, if you have the capability to do it. (Standard disclaimers apply.) I don't think home prices, even at the top end will fall that much. Closed Access home prices are more like growth stocks, though, in that much of their value is based on far future expected rents, since there is an embedded growth rate in Closed Access rents, so Closed Access homes will rise and fall more with general economic expectations more than they did before the problem became so acute.<br /><br />That's my guess.Kevin Erdmannhttps://www.blogger.com/profile/07431566729667544886noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-5287615651426271992016-07-06T20:57:37.899-07:002016-07-06T20:57:37.899-07:00Maybe I'll be wrong....Maybe I'll be wrong....Kevin Erdmannhttps://www.blogger.com/profile/07431566729667544886noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-5117727636277759502016-07-06T20:19:16.199-07:002016-07-06T20:19:16.199-07:00"Given the political times we are living in, ..."Given the political times we are living in, this will be interpreted as a bubble (rising ownership, rents, and prices) and there will be pressure for self-flagellation before we even get to rising new home sales, let alone rising interest rates. And, the result would be continued stagnation with limited access to credit, rising rents, and interest rates hitting zero." --KE<br /><br />That did it. I am giving up on macroeconomics and monetary policy.<br /><br />I hereby officially take up gardening as my hobby and interest. Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-18909241897528387192016-07-06T19:25:47.614-07:002016-07-06T19:25:47.614-07:00I think that based on the current widely accepted ...I think that based on the current widely accepted idea that we are in a period of "secular stagnation" that the Fed will be content on undershooting their 2% inflation goal and failing to realize that although we are at near 0% short term interest rates - monetary policy is not necessarily easy right now. With this in mind, it looks like long term interest rates will continue their decline or stay at current low levels due to lowered long term inflation expectations & the reduced probability of a sustainable rise in short term interest rates. What would this scenario mean for housing prices and rents going forward though? More of the same spread between owners and renters at lower price points where credit is more constrained? What do you think would happen to home prices and rents in the event of a premature tightening period from the Fed?Noah Manfredinoreply@blogger.com