06511 Leads State In Rising Home Values
| May 12, 2016 11:15 am
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Posted to: Housing, East Rock
The values of single-family homes in the central part of New Haven rose faster from 2004 to 2015 than values in any other part of the state of Connecticut, according to a new Washington Post analysis.
The Post compiled home value data from over 19,000 zip codes across the nation. The 06511 zip code, which generally includes Dwight-West River, Beaver Hills, Dixwell, Newhallville, East Rock, and Wooster Square, saw a 28% increase in home value in the past 12 years, the largest percentage increase in the state. In this area, the average single family home in 2015 was worth $75,908 more than it was in 2004.
Central New Haven also had among the highest single family property values of any zip code within the region. A typical single-family home in zip code 06511 was worth $351,000 in 2015—more than single-family homes in any nearby zip codes except Woodbridge ($397,000) and Guilford ($386,000). Home values in central New Haven have increased faster than, and are worth more than, single family homes in any zip code within Bridgeport, Hartford, or Waterbury.
Within Connecticut, the only other zip codes that saw a comparable jump were 06878 and 06820 – wealthy neighborhoods within Greenwich and Darien that saw property values increase by 21 and 23 percent, respectively. Throughout Fairfield and New Haven Counties as a whole, values dropped by 4 percent.
The Westville and Amity sections of New Haven also outperformed other nearby areas, with zip code 06515 seeing a 15 percent increase. Values in other sections of the city remained relatively flat.
According to the Post, nationwide trends show that, as the housing market has recovered, wealthier neighborhoods have seen greater increases in home values — a concerning shift that reflects growing income inequality. New Haven seems to be somewhat of an anomaly in this sense. The average home value in the city is roughly comparable to home values across the state as a whole. Yet, it has still seen significantly more growth than its nearby peer cities and towns have over the past decade.
The Post also noted disparities correlated with zip codes’ racial compositions. The data shows that neighborhoods with large minority populations have seen less improvement in the housing market. Some predominantly African-American neighborhoods within sections of Bridgeport, Providence, and Hartford saw steep declines. But New Haven broke the trend, since it has a racially-diverse population but has seen significantly greater improvement than many surrounding neighborhoods that are mostly white, including Woodbridge and Bethany, where home values dropped by nearly 10 percent.
One possible explanation for the trend is that central New Haven is perceived as a more walkable community than surrounding areas of the state. In many cities throughout the United States, walkable urban cores saw more rapid appreciation in home values than distant suburbs – for example, several neighborhoods in central Brooklyn registered price increases of nearly 200 percent even as prices stagnated in much of Long Island. This pattern was observed in other parts of Connecticut, too: for example, throughout the Greater Hartford region, the most rapid increases took place in the central sections of West Hartford, and in lower Fairfield County, coastal areas like Greenwich and Darien improved more quickly than inland areas with similar levels of wealth but lower levels of walkability. Results from the 2015 DataHaven Community Wellbeing Survey of over 16,000 randomly-selected adults statewide confirm that West Hartford, New Haven, Darien, and Greenwich are perceived to be among the most walkable areas of the state, as defined by a scale of survey questions that measures perceived access to nearby stores, parks, bike lanes, safe neighborhoods, and sidewalks. Recent reports suggest that these types of areas have seen dramatic increases in real estate values because people of all ages are seeking to reduce their reliance on cars.
Aparna Nathan is Research Intern at DataHaven, a formal partner of the National Neighborhood Indicators Partnership with a 25-year history of public service to Greater New Haven and Connecticut. DataHaven’s mission is to improve quality of life by collecting, sharing and interpreting public data for effective decision making. Mark Abraham, DataHaven’s Executive Director, helped edit this article.
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posted by: cedarhillresident! on May 12, 2016 11:44am
Ugg I hate this kind of data. Years ago they screwed up with the revals and rated the value of Cedar Hill homes with an almost triple increase. Some person that did not know the city treated our area as if it was part of “east rock the good side”. That is when I started my battle with city hall. A few years later someone from city hall admitted that it was a mistake. And they straightened it out (it took 4 year of paying inflated taxes on house we could never sell for the price The good side could sell them for) . No refund for the mistake. It had happened in a few other areas like wooster and the properties near Jocelyn Square had it happen and if I remember correctly the annex and parts of city point. All because we were in a certain zip or district never considering the make up or crime in the area. So when I see a report like this I shiver to the thought that they would lump us in with East Rock again despite the fact that they are two TOTALLY different areas and should not be taxed the same….lets hope the next people to handle that understand the dimension of the city because I can not go through that again.
posted by: Walt on May 12, 2016 11:46am
A major factor in high values of single family homes in central New Haven is their rarity
Where are they other than the Yale owned facilities on Hillhouse Ave,?
I recall one, lived in then by Sam Chauncey , then a Yale Honcho===kind of worn out, but maybe valuable historically, butin condition that had not been painted in eons,
posted by: ctgirl on May 12, 2016 12:06pm
This is great news for this area of New Haven! I feel it can be overlooked in real estate, for East Rock or Westville.
My home is in Beaver Hills and is currently for sale.
posted by: HewNaven on May 12, 2016 1:09pm
Perfect example of how the ‘Age of Big Data’ is really just another age of arbitrary truth-telling. He who controls (and manipulates) data, will determine the narrative of societies, and will appoint oneself to locate points of reflection. If you rub that data the right way, you can make it say anything you’d like.
So what’s the objective of this reporting?
posted by: Renewhavener on May 12, 2016 1:15pm
While this should surprise no one involved in the built environment here locally, the question we need to be asking is whether or not it is good enough. A 28% rise over 11 years amounts to a only a 2.275% gain per annum on a compounding basis. Pretty paltry.
Moreover, with all due respect to the conjectures in the trailing paragraphs of this article, walkability, while important to some, matters much less than jobs:
posted by: robn on May 12, 2016 2:01pm
That’s weird because Zillow keeps consistently showing ER with a huge foreclosure rate compared to the rest of the city (something I find hard to believe) and someone up on Ronan St recently told me that houses there are selling significantly (30%) under value because of their huge tax increase last time around. Also a house near me just sold for a comp price from 10 years ago.
posted by: Faccheck on May 12, 2016 2:35pm
“The 06511 zip code, which generally includes Dwight-West River, Beaver Hills, Dixwell, Newhallville, East Rock, and Wooster Square, saw a 28% increase in home value in the past 12 years, the largest percentage increase in the state. In this area, the average single family home in 2015 was worth $75,908 more than it was in 2004.
Well just what does that mean? If the value raised by $75,908, then what is the gross value from 2004 to 2015?
28% of What??
“Central New Haven also had among the highest single family property values of any zip code within the region. A typical single-family home in zip code 06511 was worth $351,000 in 2015—more than single-family homes in any nearby zip codes except Woodbridge ($397,000) and Guilford ($386,000). Home values in central New Haven have increased faster than, and are worth more than, single family homes in any zip code within Bridgeport, Hartford, or Waterbury.”
Not so fast Eddie,
According to the U.S. Census bureau American Community survey…MEDIAN HOUSING VALUE OF OWNER-OCCUPIED HOUSING UNITS 2006 - 2010. New Haven city home ownership value is: $227.800
Guilfords value is: $429,800. Woodbridges value is;unlisted. Connecticut s value is :$296,500.
Geographic Area Median Margin of Error
Connecticut 296,500 +/-1,092
PLACE AND COUNTY SUBDIVISION
New Haven city, New Haven County 227,800 +/-6,450
New Haven town, New Haven County 227,800 +/-6,450
Guilford town, New Haven County 429,800 +/-12,461
Guilford Center CDP, New Haven County 426,100 +/-49,360
Bridgeport city, Fairfield County 236,000 +/-6,651
Bridgeport town, Fairfield County 236,000 +/-6,65
Hartford town, Hartford County 188,000 +/-6,725
Waterbury city, New Haven County 165,200 +/-2,422
Moreover if the data folks here searched the Visions government solutions web site by address in guilford and New Haven, the results would POOHoo the Wash. Post and Data Havens findings.
posted by: Jonathan Hopkins on May 12, 2016 2:36pm
Here is a map of the 2011 Property Revaluation for New Haven (showing neighborhood AVERAGES only for SINGLE FAMILY HOMES):
I suspect that neighborhood, rather than housing type, influenced whether property values rose or not seeing as Edgewood, Wooster Square and East Rock (mostly multi-family houses) outperformed Beaver Hills (overwhelmingly single family houses).
Beaver Hills is nearly all single family houses, Edgewood, Dwight, Dixwell, Newhallville, Prospect Hill, and East Rock also have many single family homes, and Wooster Square has a fair number as well.
posted by: Bradley on May 12, 2016 4:11pm
Faccheck, the story says the average value in 06511 was $351,000 in 2015. It also says the increase was 28% over 2004. Eight-grade algebra tells you that the 2004 value was a bit over $274,200. Also, the data you cite are from the period 2006-2010. As any honeowner can tell you that a lot happened in the housing market from that period to 2015, the year used in this study.
posted by: Esbey on May 12, 2016 5:17pm
@Aparna Nathan (the author) thanks for an interesting story, but can we have a link to the WaPo original so we can evaluate its quality?
@JH, thanks for the great map and for reminding Walt of what New Haven actually looks like. If the last revaluation was in 2011, does that mean there is a 2016 revaluation due?
@FacCheck, the article is about zip code 06511, and your figures are about New Haven city. These are not the same thing. Also, the Census ACS is a terrible source for housing values. As far as I know, these are self-reported (i.e. made up by the owners.) On the lack of accuracy in the self-reported ACS numbers, see https://www.lincolninst.edu/pubs/2503_Evaluating-the-Accuracy-of-American-Community-Survey-Data-on-Housing-Values-and-Property-Taxes/
@Robn, Zillow-defined East Rock has a quite a mix of neighborhoods (see CedarHill’s complaint above!) which might explain the alleged foreclosure rate. If you look at Zillow’s recent sales data, there are a good number of post-revaluation $1-million plus sales in East Rock / Prospect Hill. You are correct that anecdotally those folks think the 2011 revaluation killed their housing values, but houses still sell for *a lot* of money there. On the other hand, it is true that a 800k house in East Rock pays about the same R.E. taxes as a $5 million single family home in Manhattan. That surely does hold down housing values and makes the overall rise in values more impressive.
@HewHaven, the idea that all data are meaningless is New Age nonsense, a reason to substitute truthiness (“my gut tells me it is so”) for truth. Scientists rely on data, curing disease and sending rockets to Mars. Charlatans deride data and send our country down the drain. Better than saying “all data are lies” is to learn about careful data analysis so as to interpret data carefully & well.
posted by: Faccheck on May 12, 2016 5:34pm
Back at Bradley :
If eight grade Algebra could have told us that the equation = “a bit over $274,200” in 2004, then why did not the Wash post or Data haven print that? It is not up to the reader to surmise what the writer is trying to convey. You say; as any homeowner can tell you that a lot happened in the housing market from that period to 2015, the year used in this study”. However Robin, who I take, is a long time resident in East Rock writes:
Posted by: robn on May 12, 2016 3:01pm “
“I find hard to believe) and someone up on Ronan St recently told me that houses there are selling significantly (30%) under value because of their huge tax increase last time around. Also a house near me just sold for a comp price from 10 years ago”.
I too live in zip 06511 and have since 2004, I can attest that the value prices quoted here as actual sales prices are bogus at best. One need only to read the New Haven Register every Saturday, as I do, to observe that the sales data is front loaded so as to encourage unsuspecting realtor/ speculators that the market is; and has been, more valuable than it is in FAC. The Census data is a more reliable predictor of market value because surveys are ongoing every year.. The survey I cited was the more recent released survey, Survey’s in this case are for five years, and the most recent since 2011-2016 is now in process.
By the way, it takes more than eight grade Algebra to conduct, decipher, correlate and disseminate Census gathered data, which today goes unchallenged.
posted by: ILivehere on May 12, 2016 5:48pm
Yes 2016 is a reval year.
posted by: Faccheck on May 12, 2016 5:56pm
From the Same Lincoln institute link you posted;
“Although the rent to price ratio and the price and value of land are obvious metrics for understanding dynamics of housing and house prices, few of these data can be directly observed. In the case of the rent to price ratio, the implicit rents accruing to homeowners are not observed and must be estimated based on market rents of similar rental units. In the case of land, direct land sales are rarely observed in built up areas and occur mainly where new suburban development occurs. To estimate the value of land in built up areas requires separating the directly observed sale price of housing into the underlying values of the housing structure and the land, neither of which is separately observed.”
Clearly Lincoln intimates one cannot arrive at housing data saleswithout separating the directly observed sale price of housing into the underlying values of the housing structure and the land, neither of which is separately observed.”
posted by: robn on May 12, 2016 6:37pm
One of my points was factual. A nearby comp just went for below 5 years ago appraisal value. The other point about Ronan properties underselling was admittedly anecdotal.
My sarcasm detector is a bit firied so I don’t know if you’re agreeing with or disagreeing with one or both of my points.
posted by: Bradley on May 12, 2016 8:54pm
Robn, as Cedarhillresident notes, the last reval hit all of East Rock. If it had been a long-term drag on the market, prices would have risen less in 06511 than in the rest of the city, rather than the reverse. Also, St. Ronan Street is not typical of East Rock, much less the larger zip code area.
Faccheck, my second point was that you are using old data. The housing market as whole recovered after your data were collected, but some areas (including 06511) did better than others. As Esbey notes, you are also comparing apples and oranges (a single zip code vs. the entire city). In addition, the study is comparing trends in housing values over time, the census data you cite is not. BTW, your final sentence in your response to Esbey does not follow from the paragraph you quote. The Lincoln Institute says that the two metrics are “obvious” ways of looking at housing markets. It does not say they are the best or only ways of looking at housing markets. You can compare trends in housing values across different areas without knowing anything about rents.
Renewhavener, the difference between housing and other investments is that housing is typically leveraged. If you bought a house in 06511 in 2004 with a 20% downpayment, your rate of return would substantially higher than your figure. Most homeowners also itemize their federal taxes and deduct their mortgage interest and property taxes, further increasing the effective rate of return.
posted by: Noteworthy on May 12, 2016 9:52pm
I hate stories like this because they’re factually untrue. My house in Westville is worth $9K more than I paid in 2004 despite lots of improvements. Why? Foreclosures and property taxes which have doubled. Every tax hike decreases value. Every foreclosure and depressed sale lowers value. Mayor Harp is gearing up to lower our values again.
posted by: jim1 on May 13, 2016 6:30am
Looks like a good reason for Harp to raise takes on a few homes, like last time. I live in Wooster Sq. do I have to move to Dixwell Ave. to keep my taxes down.
750 sq. feet home=tax of $6,000.00 a year???????????!!!!!!!!!!!!??????????? O and my car that lives at same address, just sh.t out of luck.
posted by: wendy1 on May 13, 2016 7:36am
In 2000 I bought shabby one-bedroom for $83,000, cleaned and fixed for another $10,000. Last year my neighbor renovated a matching apt.—-price $240,000 (same size as mine) and still for sale.
I was very lucky although Yale mortgage office screwed up my fixed rate low and I had to empty my savings acct in 2004. I tell people to haggle for realistic prop. prices and if possible, avoid the mortgage scam. The other problem is finding an honest home inspector. Mine was an old conman.
Another problem seems to be that Yale wont help you with a down payment here in Wooster Sq. I was a nurse and got turned down. The bank Yale sent me to treated me like I was a junkie trying to buy the Taj Mahal. The lawyer the deal required later got convicted of house flipping (I did not pick him but needed him to goose the bad bank.)
posted by: robn on May 13, 2016 8:00am
It would be great if NHI or somebody could aggregate the data neighborhood by neighborhood so we have some sense of how the city is doing overall. Everybody was dissapointed by the 2011 data illutrated in Hopkins’ map because low-wealth neighborhoods lost housing value (typically a large percentage of personal worth for working class) and high wealth neighborhoods got a big portion of tax burden shifted their way. Its in everyone’s self-interest for housing values to rise equally in the city.
posted by: Renewhavener on May 13, 2016 8:01am
@Bradley, “Renewhavener, the difference between housing and other investments is that housing is typically leveraged. If you bought a house in 06511 in 2004 with a 20% downpayment, your rate of return would substantially higher than your figure. Most homeowners also itemize their federal taxes and deduct their mortgage interest and property taxes, further increasing the effective rate of return.”
Perhaps. A single-family home investment, even when taking into consideration the advantages of leverage and income tax itemization to the good, must also balance the expenses of property taxes, depreciation, upkeep etc. to the bad. It also generates no positive cash flow and one must also account for the transactional cost to dispose of the asset, such as realtor’s fees, attorney’s fees, conveyance taxes, etc. to make it liquid again and actually realize a return. Most sellers also experience the other costs at point of sale as referred to in the article above related to opportunistic behavior of prospective buyers. They ask for improvements, concessions, etc. at the point of sale, further lowering the return.
A single-family home is generally always a negative NPV proposition when looking at this full picture. It is made all the more negative around here b/c we have such an awful economic environment. We cannot generate jobs nor increase our population and are thusly saddled with lower demand and lower appreciation.
Everywhere in america shown leading in home appreciation in the wash post article are leading in other meaningful and causal ways, all economic in nature.
posted by: HewNaven on May 13, 2016 8:43am
That’s a nice strawman you setup there. I didn’t say it’s all or nothing with data, much less empiricism, in general!
My point is that anyone working for a company like Data Haven can control the narrative within their reach (e.g. New Haven) such that we look at ONLY the data they deem relevant. Why, in this case, are we just looking at 2004-2015? Why not 2007-2015? Why not 06511 and 06513? Why not include multi-family properties? WHAT IS THE POINT OF THIS STORY? A report like this only raises MORE questions, and it answers very little. It seems like an obvious PR attempt.
posted by: LookOut on May 13, 2016 9:13am
@Renewhavener - you bring up a great point. If 28% growth in value over 11 years is high end, that paints a very bleak picture for the state of CT. Smart people continue to see this and take action;
Look at it this way, if I bought a $300K property in this hot neighborhood in 2004, I would have paid approximately $8K that year in city taxes (this number varies by neighborhood and home improvements) . In 2015, my home value increased to $384 and my tax bill increased to approx 11K.
Over an 11 year period, I gained $84K in value but paid $100K in taxes (in exchange for little more than trash collection)...and this is the best deal in the state!
posted by: Bradley on May 13, 2016 9:56pm
Renewhavener, housing economics is a complicated subject, precisely for the reasons you cite. One of the few positive outcomes of the recession is that it disabused people of the notion that houses always increase in value and that homeownership always makes economic sense. But both you and LookOut fail to address imputed rent. Homeowners don’t have to pay rent and this has to be part of the economic analysis of homeownership. About two-thirds of Americans are homeowners, in large part because it makes economic sense for them. In contrast, few people are voluntary renters, i.e., people who choose to rent even though they could afford to buy.
posted by: westville man on May 14, 2016 7:54am
Bradley is right. Two big benefits of homeownership but I don’t see talked about here is that your payments each month reduce your mortgage – almost a forced savings plan. Secondly the tax payments that you talk about our deductible , As is the mortgage interest, affectingly reducing those numbers by at least 25%. My home in Westville has doubled in value and 15 years and on top of that, my 15 year mortgage is now paid off. I am sitting on a large “nest egg” that I can sell and cash out when the time is right. None of that would’ve been possible if we had rented these past 15 years. sorry for typos – dictating on my iPhone.
posted by: Esbey on May 14, 2016 9:11am
@HewHaven, thanks, I understand your point better now. But: DataHaven is a *nonprofit* concerned with the well-being of the region. What do you think is their nefarious motive for PR spin? I think they are a super-high quality institution who add greatly to our understanding of the region. The article focuses on 06511 because it turns out to be the CT zip code with the highest home price increase. That is interesting and a good subject for an article. You can search the WaPO for the original article and look at other zip codes (and there is a color coded map at the top of this article).
As for those who say 28% is a very small increase, recall that these years include the epic price collapse of the Great Recession. The WaPo says the national average increase is 21%, and that the average CT increase is slightly *negative*. So yes, 06511 is (on average) doing fairly well. And of course there is variation across neighborhoods and houses. The fact that your house (or your neighborhood within 06511) hasn’t gone up 28% does not mean the numbers are bogus.
posted by: robn on May 14, 2016 9:55am
I’ve heard a lot of criticism of the mortgage interest tax deduction (which is somewhat of an accident of history) being unfair to renters but WVM’s view that incentivizing home ownership is a forced/incentivized savings plan and therefore good is actually very astute.
It’s somewhat accurate to describe a 28% price gain (compounded 2% per year growth) as weak if one considers that in the same period the S&P 500 gained @8% per year including dividends.
posted by: westville man on May 14, 2016 4:21pm
Thanks Robn. And regardless of how much my home appreciated, imagine now living in that same home for about $1,000/mo now that the mortgage is paid. How many renters can say that about their rent? Your own home, 4+ bedrooms in Westville. And my mortgage payments were comparable to rental rates to begin with. Interest rates have changed the game.
posted by: Bradley on May 14, 2016 7:08pm
Robn, you do have to take leverage into account when comparing rates of return. Let’s say you bought a house for $250,000 with a $50,000 (20%) downpayment. Over the next 11 years the house appreciates by 28%, to $320,000. You’ve made a $70,000 gain on a $50,000 investment, which is better than what you would have made in the stock market. If you had made a 10% downpayment, it would have been a $70,000 gain on a $25,000 investment. Moreover, the 8% S&P return you cite is presumably pre-tax, and would be substantially lower after taxes.
Naturally, your actual return would have depended on how your monthly costs (mortgage, taxes, maintenance, etc.) would have compared, after tax benefits, to what you would have paid in rent for a comparable property. But generally, homeownership makes economic sense for people who are going to stay in one place for a reasonable amount of time, e.g., five years.
posted by: westville man on May 15, 2016 8:12am
Very few buyers put 20% down. Most put 5—10% down and get additional $$ from the seller for closing costs. Some get nearly 100% financed.
posted by: robn on May 15, 2016 10:45am
I think buying is a better use of money than renting; however I don’t agree with your math and the supposition that a home purchase (in this circumstance) out performed the stock market. You’ve failed to take into account that the great majority of buyers are borrowing and paying mostly interest up front.
posted by: Bradley on May 15, 2016 8:13pm
Robn, you’re right that you are largely paying interest in the early years of a mortgage. But if your after tax mortgage payments are about equal to what you would pay in rent, it does not make a difference. This rough equivalence is common (see Westville man’s comment), although not universal. The tax benefits of homeownership are important in making the comparison. A median income family faces a combined marginal tax rate of about 25%. So if the family’s monthly mortgage payment is $2,000, and the bulk of the payment goes to interest and property taxes, its net cost is about $1,500, less than the rent for a two-bedroom apartment in much of the city.
My earlier discussion did not account for the homeowner’s growth in equity in the home. If you do include it, the rate of return for homeownership is better. Let’s say you have only paid off one-quarter of the principal of a $200,000 mortgage over 11 years. That is still $50,000 in equity. Going back to me earlier example, let’s say you sell your home for $320,000, and that $25,000 goes to the realtor, conveyance tax, and other transaction costs. Another $150,000 goes to pay off the remainder of your mortgage. That still leaves you with a $95,000 net gain on a $50,000 investment ($320,000 - ($50,000 downpayment + $25,000 in transaction costs + $150,000 in remaining mortgage)).
Nationally, most households choose to buy their homes. They could have chosen to invest the money instead and continue renting. The fact that they do not suggests that they believe that housing is a better investment than the stock market. They may be wrong, and many homeowners were devastated by the recession. But historically homeownership has been a wise investment for most folks.
Much of this discussion is irrelevant to the majority of the city’s residents who are priced out of the homeownership market. This lack of access to the housing market has been a substantial part of the rising inequality of wealth in the country.
posted by: Renewhavener on May 16, 2016 7:30am
@Bradley, “Nationally, most households choose to buy their homes. They could have chosen to invest the money instead and continue renting. The fact that they do not suggests that they believe that housing is a better investment than the stock market.” Or… that they have no knowledge or framework to judge alternatives. This “fact” would presuppose full knowledge and access to alternative investment choices. This is dubious.
Appreciate and respect your commitment to your position. However, it does not play out in the numbers generally, and certainly has not played out locally. Moreover, you are also still judging the comparable return to the S&P without full consideration of carrying cost nor the transaction cost. Am not anti-home-ownership by any means, but believe we all need to check our expectations. Also, there is a a high level of financial illiteracy at play in many home purchase decisions, especially by first-time buyers.
Separating the choice from the outcome, what appears most interesting in the wash post map for me is when one zooms out the places with the most appreciation are the sort that attract, not repulse, firms like GE. Places that are friendly to private enterprise and grow jobs.
posted by: Bradley on May 17, 2016 6:15am
Renewhavener - thanks.
We agree on the need for greater financial literacy. No one should seriously consider buying housing without being aware of its full costs, including transaction costs. Homeownership does not make economic sense for some people even if they can afford it. If you need to/want to move in three or four years, you’re better off renting and putting your money in other investments. If you pay cash for a house (e.g., you are an empty nester who is downsizing), your return will be comparable to other investments in most cases, but you will have an illiquid investment.
My example does include carrying costs and transaction costs. The carrying costs reflect imputed rent, which several commentators have excluded. You have to live somewhere and the rent you avoid by owning your home has to be part of the economic analysis. And the imputed rent has to be for the house you live in, rather than the apartment you previously rented. If I move from a two-bedroom apartment that rents for $1,600 per month to a larger three-bedroom house that would cost me $2,000 per month to rent, my imputed rent is the latter, not the former.
The relationship between housing markets and business-friendliness is complicated. But it is noteworthy that several of the markets that have seen the biggest increases in home value in recent decades are those with high taxes and extensive regulations (think New York City and San Francisco). Boston, where GE is moving, is not known for its low taxes or its hands-off government. The problem in these markets is not declining home values but rather decreasing affordability.