Sunday, August 31, 2025
Thursday, August 28, 2025
Inflation Adjusted House Prices 2.5% Below 2022 Peak; Price-to-rent index is 9.8% below 2022 peak
Today, in the Calculated Risk Real Estate Newsletter: Inflation Adjusted House Prices 2.5% Below 2022 Peak
Excerpt:
It has been 19 years since the housing bubble peak, ancient history for many readers!
In the June Case-Shiller house price index released Tuesday, the seasonally adjusted National Index (SA), was reported as being 77% above the bubble peak. However, in real terms, the National index (SA) is about 10.0% above the bubble peak (and historically there has been an upward slope to real house prices). The composite 20, in real terms, is 1.4% above the bubble peak.
People usually graph nominal house prices, but it is also important to look at prices in real terms. As an example, if a house price was $300,000 in January 2010, the price would be $443,000 today adjusted for inflation (48% increase). That is why the second graph below is important - this shows "real" prices.
The third graph shows the price-to-rent ratio, and the fourth graph is the affordability index. The last graph shows the 5-year real return based on the Case-Shiller National Index....The second graph shows the same two indexes in real terms (adjusted for inflation using CPI).
In real terms (using CPI), the National index is 2.5% below the recent peak, and the Composite 20 index is 2.7% below the recent peak in 2022.
Both the real National index and the Comp-20 index decreased in June.
It has now been 37 months since the real peak in house prices. Typically, after a sharp increase in prices, it takes a number of years for real prices to reach new highs (see House Prices: 7 Years in Purgatory)
https://www.calculatedriskblog.com/2025/08/inflation-adjusted-house-prices-25.html
Mom-and-pop NYC landlords fear unsellable properties if Mamdani wins: ‘The kiss of death’
Zohran Mamdani has mom-and-pop landlords on edge.
The city’s Democratic mayoral candidate has long pledged to freeze the rent of New York City’s rent-stabilized apartments. His affordability-focused agenda earned him enormous support from primary voters in June.
But small multifamily building owners told the Wall Street Journal that Mamdani’s housing policy could ice them out of a profit and force them to sell.
While large landlords own the majority of the city’s 2.3 million rental units, smaller owners still take up a considerable share. The housing data website justfix.org reported in 2020 that roughly 28% of the city’s rental stock was owned by landlords with just one to five buildings in their portfolios.
These mom-and-pop landlords told the Journal that the typical challenges of ownership — maintenance costs, slow permitting processes and unreliable tenants, for example — have been compounded since the pandemic by high inflation and steep interest rates.
Some owners reported barely breaking even. Others are walking away entirely, The Post previously reported.
The current sales climate for these buildings is not promising. Sales for rent-stabilized apartment buildings with 10 or more units have been slowing down for years.
Sales of buildings with at least 75% rent-stabilized units generated $751 million last year — a 70% decrease from 2018, according to Ariel Property Advisors.
Paul Rahimian, the CEO of a commercial real estate lender, told the Journal that owners are cutting prices by 10% on average. The lender called Mamdani’s promised policy “the kiss of death.”
Rent laws passed in 2019 under Gov. Andrew Cuomo sharply limited rent increases, even for major capital repairs. Large-scale renovations previously offered some rent-stabilized property owners a path to converting their investments into market-rate leases.
Landlords of rent-stabilized buildings now fear a total rent freeze would grind the sluggish market to a near-halt.
One Brooklyn landlord told the Journal she is struggling to pay her current $3,800 mortgage amid a prolonged wait for refinancing, as well as undertaking three different evictions over a collective $69,000 in back payments. She said she plans to sell if Mamdani wins.
The Mamdani campaign has publicly supported reprieve for overburdened owners, however, supporting an exemption for landlords whose finances justify rent hikes.
The director of NYS Tenant Bloc, a Mamdani-aligned pro-tenant lobby, told the Journal that a rent freeze is not “make-or-break,” for landlords.
Tuesday, August 26, 2025
San Francisco Has A Black Market For Housing... That's As Bad As It Sounds
by Chris Calton via Mises.org
The owners of three single-room occupancy (SRO) hotels in San Francisco’s Chinatown recently settled a lawsuit with the city, agreeing to pay a hefty fine of more than $800,000. Among their alleged crimes was that they “illegally converted, combined or added unauthorized housing units” to their properties.
The allegations expose something that should be humiliating for San Francisco: the development of a black market for housing.
The lawsuit was not San Francisco’s only effort to combat the underground housing market. In recent years, to name a few examples, the city sued a man for cramming 15 tenants into a three-bedroom home and fined a developer $1.2 million for constructing an apartment complex with triple the residential units that city planners had approved.
Even Jack “Ziz” LaSota—leader of the Zizians, a cult-like group of transgender vegan programmers linked to several murders—recruited followers as part of a shady rental scheme.
LaSota had purchased a used tugboat for $600 and sailed it to San Francisco with plans to evade housing regulations by anchoring it offshore and renting its rooms to like-minded tenants.
“Unauthorized dwelling units” have proliferated in San Francisco for decades. Unpermitted “in-law suites” attached to single-family homes are so commonplace that locals sometimes call them “outlaw suites.” As far back as 1993, the city faced a scandal after the head of the Bureau of Building Inspection was caught operating two of these outlaw suites for 10 years. A similar story involving a senior building inspector came to light in 2021.
In 2014, the city created a pathway to legalize units built before 2013, but it has had lackluster results. According to a 2019 memo from the Planning Commission, the average cost of bringing an unauthorized unit up to code was $60,000, and only 140 of them had been legalized in the previous two years. The memo estimated that as many as 50,000 unauthorized units still existed in the city.
How is it possible to create such an extensive black market for housing?
Contrary to common misconception, black markets are not free markets. Free markets are characterized by secure private property rights and are primarily regulated by competition. By contrast, black markets emerge where the state no longer recognizes property rights and impose laws that restrict legal trade and suppress market competition.
This is why the producers of illicit drugs operate as cartels. Economist Bruce Yandle, as executive director for the Federal Trade Commission, came up with the “bootleggers and Baptists” theory of regulation after noticing that bootleggers had joined evangelicals to support alcohol prohibition because they wanted to stifle legal competition.
Excessive taxes and overbearing regulations can produce outcomes similar to prohibition. Limitations on foreign trade have led to particularly Orwellian examples of black-market activity, such as the Russian fruit smugglers who were caught illegally repairing roads after Russia banned food imports from Europe (a warning, perhaps, for those cheering on President Trump’s trade war).
Black markets expose a regulatory paradox. Sensible governmental regulations are not designed to undermine the regulatory mechanism of the market, but to complement it with quality controls, usually to ensure that the competition to lower prices does not come at the expense of safety. Regulatory excess, though, ironically upends the price-quality tradeoff even more than too little regulation. The drug market illustrates this well—fentanyl and other dangerous contaminants have made the black market drug supply cheaper and far more lethal than the heroin people used to buy from the Sears catalogue.
Black market housing works similarly, with desperate residents choosing dangerous homes because legal rents are unaffordable. The city evicted a man from his $400 “apartment” after discovering it was just a tiny wooden box in somebody else’s living room, violating the fire code. The fire code provides sensible safety precautions that were put in place after the great conflagration of 1906, and it did not impede rebuilding efforts. But when an oppressive regulatory environment creates black markets, all regulations go out the window—even the most sensible ones.
San Francisco’s black market for housing is the direct outcome of the city’s abandonment of private property rights. San Franciscans can still own property, to be clear, but the rights traditionally attached to it are wholly subject to the whims of the populace. In addition to oppressive zoning regulations, San Francisco subjects every building permit to discretionary review. Discretionary review hearings invite every city resident to weigh in on what a person should be allowed to do with his or her property.
These policies have made housing in San Francisco artificially scarce.
The existing housing stock is consequently divided between a licit housing market strangled by governmental regulations on the one hand and an illicit housing market protected from competition on the other.
If San Francisco truly wants to stamp out its black market in housing, it must return housing to the free-market principles of secure property rights and market competition.
https://www.zerohedge.com/political/san-francisco-has-black-market-housing-thats-bad-it-sounds
Southampton bans short-term rentals in move that officially cancels weekend trips to Hamptons
It’s the end of the Southampton girls weekend.
Tony Southampton has banned short-term home rentals after crabby locals complained that weekend warriors’ all-night “ragers” were keeping them up too late and making the ritzy beachside village unbearable.
The measure — passed 4-1 by the village board of trustees on Aug. 19 — sets a new two-week minimum for home rentals across the ritzy beachside locale, effectively banning weekend trips for anyone who can’t shell out for a hotel or fork over thousands of dollars typically required to hold a house for 14 days.
That means Hamptons trips — which already cost between $900 and $2,000 for a weekend stay — could now cost anything from $10,000 to $15,000 and up for a two-week rental.
“All those girls and bridesmaids weekends are out of luck now,” one local real estate broker told The Post.
But Southampton mayor Bill Manger says it’s short-term renters’ own fault for partying too hard and losing their weekend privileges.
“We have been getting complaints from people in the village that the house next door is having lots of different renters coming in every weekend, and causing a disruption to the peace and harmony,” Manger told The Post, explaining locals have been calling cops with relentless noise complaints “every weekend” for months.
“They came to me as the mayor and asked, ‘Can’t you do something about this?'” Manger said.
He looked at Southampton’s neighboring communities on Long Island’s South Fork and realized almost everywhere else had already banned weekend rentals over similar complaints, and made the proposal for the village.
“We were the only outlier so it seemed to make sense to put something in place,” he said.
Word of the new law — which covers the heart of the Southampton beach community, but not the wider township’s other villages — has been slow to disseminate across the sleepy but well-heeled enclave, and some fear it will only serve to keep people out and hurt local business owners.
“It’s over. This ends my Airbnb business. That’s it,” said 55-year-old Joel Perez, who divides his time between Long Island and Miami and rents out his Southampton home when he’s in Florida.
“Nobody can afford to be out here for two weeks. What happens to people who just want a weekend getaway?” he said. “It’s really about catering to the rich and keeping people from the middle class down and out of the Hamptons.”
And he thinks the parties will only continue — but harder.
“The people who can afford to book those whole houses and throw ragers will still do it — they’ll just rent for two weeks, throw more than one party,” he said.
Zach Erdem, a Southampton restaurateur and star of HBO Max’s “Serving the Hamptons,” said he was “shocked” when the law passed.
“The rich want the Hamptons to be more exclusive. It’s been the same issue for many years, but in the end, cutting short term rentals will stop people from coming,” he said.
“They want to know how to get people to come here, but they are keeping it for only the 1% to enjoy the Hamptons. They are stabbing us all in the back,” Erdem added.
The new law comes in effect at the end of a Hamptons summer where rentals were down 30%, according to reports, which some attributed to pandemic-era buyers pumping their prices to break-even paying off their mortgages.
And some real-estate agents have even lamented that the old-fashioned long-term rental market that once sustained the Hamptons is long gone — and not coming back, no matter what laws are passed.
Despite the criticisms, some have said the new rule is a sensible step in the right direction for homeowners who are in Southampton full time.
“There are too many damn people out here. That’s the problem. There’s too many people for one day or one night. There’s no consistency,” said Paul Brennan, a longtime Hamptons real estate broker with Douglas Elliman.
“Hopefully this will prevent the practice of one or two day rentals that drive everyone crazy. They pack the houses and don’t take care of them. Landlords go crazy,” he added.
Mayor Manger pointed out that the rest of the Hamptons — where similar rental restrictions are already in place — seemed to be doing just fine.
“I don’t think it will hurt business. Is Amagansett hurting? Is East Hampton hurting? I don’t think so, there are no issues on the rest of the South Fork because of this,” he said.
“I don’t see how this became an issue since we were the last ones to adopt a code.”