What’s the house price inflation rate in neighborhoods that are actually desirable?

by philg

We’re told that house prices across the U.S. are up by 20 percent compared to a year ago (see Inflation would be 10 percent per year if house prices were included). Yet in our neighborhood here in the Florida Free State, both prices and rents are up closer to 50 percent. A community built for middle class (town houses) and upper middle class (single-family homes) now has single-family homes listed for more than $2 million (would have been $1 million two years ago).

Vast areas of the U.S. are blighted and undesirable, yet one could still buy a house in those areas and those house prices presumably feed into the statistics. What if we looked at areas that have at least some of the following characteristics:

  • good public schools
  • convenient to jobs
  • walkable
  • low crime
  • convenient to services for the middle class and above

Would the inflation rate still be only 20 percent?

Separately, maybe nominal prices don’t matter if one is sufficiently clever. “Long Island man dodges eviction for 20 years, living in house he doesn’t own” (New York Post):

A Long Island man who only ever made one mortgage payment has deftly used the courts to stay in the house for 23 years — for free, according to legal papers.

Guramrit Hanspal, 52, has filed four lawsuits and claimed bankruptcy seven times to avoid being booted from the 2,081-square-foot East Meadow home he “bought” for $290,000 in 1998.

So far, it’s worked: Two different banks and a real estate company have owned the three-bedroom, 2.5-bath home since Hanspal was foreclosed upon in 2000. But Hanspal remains.

Hanspal’s not the only occupant of the home leveraging the US Bankruptcy Code’s “automatic stay” rules, which give debtors a temporary reprieve from all collection efforts, harassment and foreclosures.

At least three other people listing the home at 2468 Kenmore St. as their address have also filed for bankruptcy in Brooklyn federal court, winning the “automatic stay,” only to have the claims eventually dismissed, court records show.

And a good deal: Hanspal, who had an initial 7.375 percent interest rate on the $232,000 adjustable-rate mortgage, likely saved himself upwards of $440,000 by not paying his bills.

Meanwhile, in 2004, Hanspal transferred the deed of the home to a friend, Rajender Pal, even though he had no legal right to do so, according to court papers. Pal, using the Kenmore Street address, filed for bankruptcy in 2005, staving off eviction yet again.

By May 2018, Chase unloaded the property to Diamond Ridge, which offered Hanspal $20,000 to leave. He didn’t take the deal, and instead, filed for bankruptcy again in 2019 and 2020. Another purported occupant of the house, Boss Chawla, filed bankruptcy four times in 2019, as did another resident — allegedly named John Smith — who filed once.

“The history of this case going on for approximately 20 years must come to an end,” Nassau District Judge Scott Fairgrieve wrote in a December 2019 housing court proceeding.

The last one is my favorite! The judge says “it must end”, but Messrs. Hanspal, Pal, and Chawla are still there two years later.

Loosely related… the happening downtown neighborhood of Delray Beach, Florida (I stopped there for dinner after teaching a class that ends at 9:20 pm):

37 thoughts on “What’s the house price inflation rate in neighborhoods that are actually desirable?”

  1. Offtopic: image loading is broken now: slow transfer speed combined with load-on-scroll behavior make the overall experience quite miserable.

    • Jordan: Sorry about that. I am just running standard WordPress so I don’t know what the change could be. Maybe the physical host under the virtual machine at Linode is overloaded? That happens sometimes (they celebrate their passion for BLM, but apparently have no passion for performance monitors (it becomes the customer’s problem to try to figure out why a VM is sluggish)).

  2. Anecdotal evidence from house shopping in Tampa area – decent houses are on the market for less than a week and go 5-10% over asking price. My agent is still adjusting (“This house would have been 420K in August, and now it was listed for 500K and had an offer for 530K?”). Me, coming from another state: “Wow, this house is listed under 1.5M! Lets bid up!”

    • Another anecdote – it apparently is impossible to find an appraiser in Tampa (my mortgage broker had to go to 20+ companies to find someone’s able to come out in Dec).

    • It was going to be my retirement destination in a couple of years, but ever-increasing property taxes and HOA fees encouraged me to list my waterfront FL luxury rental condo for sale last month at 150% more than I paid for the unit five years ago. I listed it FSBO on Zillow, but got inundated with real estate agents begging for the listing. I unlisted it after less than a week and will sell it the traditional way with an agent.

  3. Interesting to see the C8 and NSX side by side. They have a lot in common, which I don’t think is a bad idea. After all, you once wrote that the NSX was: “a Ferrari, but engineered by people who went to college.”

    http://philip.greenspun.com/materialism/cars/nsx

    For a second I thought perhaps the C8 was a preproduction Z06 but realized that was impossible. I got thrown off by the chair + guy in white shirt that looked for a second like a big rear wing. The ‘Vette has an even more aggressively-raked windshield, but it looks like Chevrolet and Acura agree in large measure about the best way to package a very high-performance mid-engined sports car. That NSX has some seriously massive front brake rotors and it looks like the wheelbase is a little shorter than the C8’s. So maybe the C8 is a little more stable and the NSX a bit more “flickable.”

    Birds of a feather…and from the C8 it looks like Florida FLHSMV2SLTGBTQIA+ doesn’t care how dark the side window tinting is. I’m pretty sure that “total blackout” treatment is illegal in a lot of places.

    After a satisfying meal of Tacos de Casa, Burritos and Tequila at Rocco’s Tacos it’s On the Prowl. They’re not cheap but not astronomical, either. Two could plausibly dine for $50-75. That’s not Hamptons crazy (yet). Let’s see what the prices are this time next year.

    https://www.roccostacos.com/delray-beach/

    • I think I would prefer the NSX over the Corvette. I will say this might be the best looking corvette yet. And as the great Obama always said the vette gets em wet!

    • It’s a technological bonanza and I get it on that level, for sure. The Type S with 600 horsepower is absolutely brimming with technology incl. twin turbos, sport hybrid, AWD, 9-speed DCT and enough computers to solve the protein folding problem whilst mining crypto. You can drive it and pay it off with the crypto you mine.

      Unfortunately only 350 units worldwide and the price **starts** at $169,500! And you have to use a smartphone in PORTRAIT mode to build your own! You can’t use a desktop PC in landscape mode, so I have to whip out my smartphone just to drool!

      https://www.acura.com/nsx-type-s

      https://nsx.acura.com/build/paint/NC1B0NEW?

      Tough choices.

    • TS: You’d definitely prefer the Corvette if you had to go away for the weekend and/or needed to go to the supermarket. The NSX has essentially no luggage space. You’d also prefer the Corvette if you lived in Florida because it is available as a hardtop convertible!

      The new Acura NSX gets around the track in 2:50.2 (see https://www.caranddriver.com/features/a15099263/acura-nsx-at-lightning-lap-2016-feature/ ).

      The C8 Corvette without the new Z06 Ferrari-style engine (670 hp without a turbocharger), is slightly faster at 2:49 (https://www.caranddriver.com/features/a35368145/2020-chevrolet-corvette-stingray-z51-lightning-lap/ ).

      So not only does the Corvette hold a lot more, it gets to Publix faster!

    • What if we add a Porsche turbo s model to the choice? I would choose that one over both of them.

    • TS: Since Donald Trump is a Nazi, anyone who loves The Donald should be delighted to own a vehicle designed by a family so closely associated with Adolf Hitler. See https://www.spiegel.de/international/business/designing-cars-for-hitler-porsche-and-volkswagen-s-nazi-roots-a-637368.html (“Ferdinand Porsche himself served Hitler during the war as the head of his tank commission. He supported Hitler’s power and profited from the regime.”)

      That said, I don’t see how a rear-engine car such as the 911 can ever be as easy to drive fast as a mid-engine car. Oversteer is not for amateurs!

      Also, how much is the Porsche Turbo S? The web site says “from $207,000”. That’s more than double the price of a new Z06 Corvette, which creates 670 hp from a non-turbo V8 with a Ferrari-style sound from the flat plane crank turning 8700 rpm. I think it would be better to get the Z06 Corvette, put the extra $120,000 (once the two vehicles are comparably optioned) into a bank account, and then, when the Biden/Harris administration is over, spend that $120,000 on a Diet Coke.

    • @Philg, @Toucan Sam: You’ve convinced me! I’ve always thought the C8 was a milestone car and a true performance bargain, a triumph of what remains of America’s “can do” spirit, and a fitting tribute to Zora Arkus-Duntov, and still surprisingly utilitarian with a real trunk and user friendly (it now supports Apple CarPlay) but this seals it: I would recommend that ANYONE who has the means should buy a C8 Corvette, either a standard model, maybe a 2LT or 3LT, or a Z06 if they intend to put in some track time.

      Anyone! This means you! I’m waiting, now. I’m waiting!

      In 1995, the Acura NSX was $85,000. That’s $154,265.52 in 2021 Bidey Bucks. The C8 Corvette is a slam-dunk bargain in whatever version you buy it, as long as you can find a dealer that doesn’t gouge (and I believe from my reading here that Philg is aware of one.) If you’re going to make an “irrational purchase” the C8 is about the most rational “irrational purchase” one can make in high-performance cars, and you instantly become a member of a large, extended family of fellow weekend lunatics who some really fun people to be around. I rest my case, your honors.

    • But Porsche supports the #PrideFestival!

      https://newsroom.porsche.com/en/2020/company/porsche-christopher-street-day-2020-21573.html

      If that does not settle it, Hunter Biden has one:

      https://www.nytimes.com/2020/02/28/arts/design/hunter-biden-art.html

      “As an undiscovered artist, he is better situated than most: living in a rented, 2,000-square-foot house in the Hollywood Hills off Mulholland Drive, with a Porsche Panamera in the driveway, plenty of natural light and a pool house he has transformed into an art studio.”

      (Note the “undiscovered artist”.)

    • I believe new Porsches are still available with clutch pedals, if that matters to you. Does to me. When I first read about the C8, I thought it would be my next car until I found out the car does too much of the driving for me.

    • The Porsche turbo model is not available with a manual transmission. You can get lower spec 911s with 3 pedals though.

    • Acura NSX is an all-wheel drive vehicle so I would by both C8 for sunny days and NSX for when roads are slick,

    • @Toucan Sam

      The turbo Porsche is for showing off to chics. The GT3 is for driving. Still available with 3 pedals.

    • I have never met a chic who knew the difference between a GT3and turbo. The nice thing with the manual is she will never ask to borrow it!

  4. The lion kingdom’s neighbor’s barndominium in the middle of nowhere Fl*rida is for sale at $1/2 million. No jobs or cell phone for 3000 miles. The problem is what anyone can do with the $1/2 million except buying another $1/2 million barndominium in the middle of nowhere.

    • TS: I do feel stupid for not borrowing for 30 years at 2.5 percent to buy a house that is appreciating at 10-20 percent per year in post-Biden $$. But we didn’t know whether we’d love it in this particular neighborhood or in Jupiter in general. And, although we don’t have a lot of space, being a renter is luxurious in many ways.

      A friend here bought a $16 million brand-new house last summer. A teardown on the same street with the same size lot is now selling for $18 million. If he had borrowed money to buy that $16 million house he is literally being paid by the bank to live in a $16 million house.

      (Actually, he is being paid by the fools to whom the bank sold the mortgage-backed securities. Party like it is 2007!)

    • https://www.youtube.com/watch?v=PzFEs_9eNsU “Warren Buffett Lives In A Modest $652K House” which now probably costs closer to $1 million. I never understood of betting the farm and do not view personal living space as an investment although it would not hurt me if my dwelling’s its price appreciates. Actually house price appreciate might hurt me by raising property taxes.

    • Lexington Mass is up 13 percent compared to a year ago and properties are selling within 14 days for 6.6 percent over list price. If that is not inflation, what would an example of inflation be?

      Mountain View is up 22 percent compared to a year ago and houses sell within 9 days.

    • Oh: They don’t want another tree cut down for development and would never allow the installation of a proper sewage system in this town (everyone is septic/tight tank here.) But in pursuit of Marijuana Salvation the plan now is to clear-cut dozens or possibly hundreds of acres off the side of a mountain to allow for the construction of indoor weed-grow facilities. If they do that, the soil from the mountain will wash right down the mountain into the lake. They don’t seem to care about that possibility being real.

      Wait until I tell you about the next town over’s adventure with a solar farm! Built at a cost of million$ of dollars, it was constructed and *never plugged in* because for some mysterious reason it cannot be attached to the grid! We think they knew that all along, but it was approved for the generous tax breaks and incentives to the construction companies and the town. It’s totally useless. You couldn’t power a flashlight with it.

    • In terms of the next-town-over’s solar farm, the way it seems to work is that select companies who are in the “real” part of Massachusetts (east of Worcester, in the Boston area) that specialize in solar power installation are poised to reap the windfall of constructing solar farms in far-flung poor areas of the state. The town itself gets some money, the “civilized people” who live in the eastern part of MA make money doing the installation, and the solar farm that doesn’t work just sits there in the breeze, doing nothing to lower the electricity rates of the poorer people who live in that town. This makes sense: some people matter, and some don’t!

  8. What we’re witnessing is the continuation and acceleration of the stratification of America into a two-class society. The area where I live has most of the criteria you list, but the problem is critical mass: you need a certain amount of “buy in” among wealthy people in order to support the commerce that supports the higher living standards. Here in my town, people still count pennies out at the local convenience store and drive around in rusted-out 1981 Plymouths – right next to the brand new BMWs and Mercedes from the seasonal renters. We haven’t hit the “critical mass” yet where there are enough wealthy people to fully gentrify the town.

    And it’s not likely we will, because there is an embedded resistance among the townies for any further development. They are old 60’s hippies who believe marijuana will lift all boats and are actively trying to pack all the town offices with like-minded stoners who don’t want another tree cut down, ever. So this town will always be poor, with pockets of wealth from some vacationers who got in before the opposition got together to stop their invasion.

    You should visit the Berkshire area of Massachusetts for a counterpoint, in particular Great Barrington.

  9. Victor Davis Hanson has a rough sketch that’s very incomplete and doesn’t begin to describe all the dynamics but is nevertheless interesting:

    “The Third Worldizing of America” – Dec. 2, 2021:

    https://www.dailysignal.com/2021/12/02/the-third-worldizing-of-america/

    I expect the overall trend he’s describing to accelerate. People who have the ability to move to a “nice” area with a critical mass of “nice” well-educated people who run businesses that employ folks at middle and upper-middle class wages will continue to do so, and the rest of the country is going to slowly wither into Poortowns where basically everything is government supported and controlled, the plum jobs are all in industries like healthcare, government, primary, secondary and higher education, and what vestiges remain of actual industry. We are going to become increasingly stratified without a strong middle class, with more people living week-to-week on gig economy neo-feudalism. Wealthier people are going to wall themselves off to an increasing extent and America is going to come to resemble a third world country writ large. People in the “nice” areas will select their destinations and try to travel between them with as few stopovers and exposure to those blighted areas as possible.

    You are correct: we are not going to become a Socialist country where everyone has to work. We are going to become a Socialist DEPENDENCY country where most people wait for a check to arrive from the government to keep them alive. Every single thing I see points in that direction.

    • Ignoring the multi-generations of government dependents in the inner cities and elsewhere, there are several good real-life Youtube videos illustrating you exact scenario in Appalachia – something like 30% of all working age adults are collecting SSD; in Puerto Rico it’s something like 50%. Aside from the fraud, these folks are unemployable. There is nothing that they could do that an employer would pay for.

    • @Deplorable Prole:

      We would do well to examine closely the problem of suicide in Sri Lanka, because I think we’re going to see a lot more of it in the United States in the next few decades. If I’m not mistaken, higher education became universally available in Sri Lanka but after people went to College, they found they had nothing to do with themselves living in a society that was still stuck in the Third World. So they killed themselves at a highly disproportionate rate. They may be smart and educated, but they have to work like dogs to survive and have no place to go.

      We are doing that and a lot more in America. This country has been systematically subverted and deconstructed, and the damage isn’t even close to over yet.

      I think at some point in the next ten years we are going to have to seriously debate the merits of allowing people to commit physician-assisted suicide, and I’m not kidding.

      https://www.wsws.org/en/articles/2012/09/sril-s28.html

    • @Deplorable Prole: Right now, Physician Assisted Suicide polls very well with the majority of Americans (and an increasing number of physicians!) when confronted with incurable diseases that leave the person in a life of misery. If our country continues to go the way I think it is going, we’re going to have people who want PAS for economic reasons as well. Or they’ll just do it. In my view this country is way past the point of no return and we haven’t yet been hammered by the big automation waves that are coming. We’re going to have tens of millions of new people with nothing to do with their lives. It’s gonna be a bad scene, because we’ve dismantled every single societal norm and we’re actively working to make ordinary people’s lives *worse* and more expensive by the minute.

      Some people will react differently by becoming violent criminals also. So we’re going to have more poverty and more crime, in overlapping waves.

      https://compassionandchoices.org/resource/polling-medical-aid-dying/

    • @Alex
      “…higher education became universally available in Sri Lanka but after people went to College, they found they had nothing to do with themselves living in a society that was still stuck in the Third World. So they killed themselves at a highly disproportionate rate. They may be smart and educated, but they have to work like dogs to survive and have no place to go.”

      Some of America’s heavily indebted college grads and non-marketable degree holders probably feel like killing themselves. But Biden and the democrats are trying to forgive student debt. But I’m not suicidal. Under new student loan forgiveness rules, the taxpayer will be stuck with the last $10,000 of my 20-year old student loan and it looks like I’ll get a refund of my student loan payments going back to 2007! And I’m a millionaire!

  10. Here in Northwest Florida Free State, new construction is up 30 percent in 2021. Our development is “nicer” than most of the surrounding town (except for the waterfront), so has the nice streets philg describes.

    Dealers have no cars, and I have people stopping me in parking lots to make an offer on my 30 year old Chevy pickup. I wondered about this but have learned old pickups are now collectible. If I had known that I might have been more careful while logging the front yard before we moved after the hurricane.

  11. Most of my friends are planting gardens and slaughtering cows. Many of them millennials. They don’t own houses and consider moving to cheap housing states. Or buying cheap land in freer states and building alternative homes. If you grow your own food and don’t have a stupid priced house you don’t need a lot of ‘proper’ wealth. Of course all these people checking out of the system means the system is going to shrink and the people at the top will have a long way to fall. All stupid little jobs may still be filled, it is the jobs in the middle of the economy that are going to be unfillable.

    • This can be solved the same way Diocletian did in the 3rd century. Restrict mobility and force people to remain in their professions. Those who refuse to work can be arrested for crimethinking (about vaccine efficacy, for example) and sent to “sharashka”-style camps, where they will pretty damn well work if they know what’s good for them.

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