Reply to Shocked at how many families in nice DMV neighborhoods are living in relatives' homes

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]I don’t know anyone who does. I live in Capitol Hill.  Maybe our neighborhood isn’t nice enough?[/quote]

I live in Capitol Hill and know two families in this situation. In one instance, they used to live in a much smaller house on the Hill and I was confused when they "upgraded" because they have very middle class jobs. But then they mentioned the house had been in her family and it made sense. There is no resentment there-- it was useful to understand.[/quote]
Do those two families make you feel like people who want to buy are shut out?[/quote]

I mean it's not about feelings. As a practical matter homes that are passed down through generations are homes that never hit the housing market. Capitol Hill has notoriously low inventory and I'm sure the houses that get kept in families (which I really do think is actually fairly common in this area) contribute to that low inventory. So yes as a practical matter families that keep homes in the family and pass them down contribute to fewer people being able to buy in this neighborhood. Same with people who choose to rent out their homes instead of sell them which has become very common in recent years as people perceive the current market as less explosive than prior markets and are loathe to give up an appreciating asset now when rates might depress prices some.
[b]
But recognizing that these things factor into the cost of housing and may make it harder for others to buy[/b] is not the same as resenting people for making these perfectly reasonable choices. But understanding that these choices factor into low inventory and high prices can also help people who are navigating the market for the first time better understand the landscape. Sure at first they might feel frustrated because they want to buy into a neighborhood and can't becasue there are so few homes on the market and you have to pay a premium for them. But understanding what is goign on will ultimately make them more informed buyers and help them make choices (including the choice to move on and buy elsewhere understanding that these homes are not suddenly goign to come on the market).

Info is power.[/quote]
I don't think this is true at all. Is there actual data that this is a [b]significant[/b] factor across the board? High prices make it difficult for people who consider the prices high but not that many homes are not sitting empty so there is still a market and people who can afford it.[/quote]

Is there data that says that when supply is lower than demand, prices go up? Yes. This is a basic economic principle.

You seem not to understand that home prices are not innate. Prices are driven by the market not the intrinsic value of the home. It's not like the prices are set by some independent authority and then people have to just figure out if they can afford it or not. Also low inventories cause people to pay more for homes simply because they want the location. Schools are a major factor in DC and result in skyrocketing prices clustered around better school options independent of the quality of the housing stock.

Low inventories also guarantee that you will find buyers even at high prices especially in a market like DC where many people move here for work. There are always people entering this market from elsewhere for work reasons and they will often pay a premium to get a home in a "good" school boundary because they have limited knowledge of the landscape generally and will pay extra to control one of the few things they can control.

So yes scarcity if housing in desirable locations drives up prices. Water is wet.[/quote]

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