There is more to high house prices than constrained supply
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Re: There is more to high house prices than constrained supply
#2>Low interest rates and innovations in the mortgage market may also be to blame
Low interest rates and innovations in the mortgage market are to blame
You are simply letting a person to buy more of any big, expensive asset. And the thing does gets out of control fast when there is a even minimal expectation of appreciation, and inflation fears.
And that on top of the fact that real estate is the only "investment" possible for an ordinary person without employing an officeload of securities attorneys in many countries.
Chinese housing market is the prime example (2B vacant square metres, with even more in the pipeline)
Re: There is more to high house prices than constrained supply
#3>Low interest rates and innovations in the mortgage market may also be to blame Low interest rates and innovations in the mortgage market are to blame You are simply letting a person to buy more of any big, expensive asset. And the thing does gets out of control fast when there is a even minimal expectation of appreciation, and inflation fears. And that on top of the fact that real estate is the only "investment" pos…
Yeah. We’re seeing a similar effect in the price of education.
Re: There is more to high house prices than constrained supply
#4>Low interest rates and innovations in the mortgage market may also be to blame Low interest rates and innovations in the mortgage market are to blame You are simply letting a person to buy more of any big, expensive asset. And the thing does gets out of control fast when there is a even minimal expectation of appreciation, and inflation fears. And that on top of the fact that real estate is the only "investment" pos…
All real estate is local.
Certainly the innovations mentioned are part of the issue for most markets, but for some markets there are other impprtant factors:
* The flood of expat money (Vancouver)
* Supply constraints due to geography and/or Nimbyism coupled with net in migration (Bay area)
* Builder hesitation plus in migration (Front range of Colorado)
Hard to paint one picture. However, making mortgages easier to get has a broad effect on demand, which will definitely shift the curve.
Re: There is more to high house prices than constrained supply
#5>Low interest rates and innovations in the mortgage market may also be to blame Low interest rates and innovations in the mortgage market are to blame You are simply letting a person to buy more of any big, expensive asset. And the thing does gets out of control fast when there is a even minimal expectation of appreciation, and inflation fears. And that on top of the fact that real estate is the only "investment" pos…
All real estate is local. Certainly the innovations mentioned are part of the issue for most markets, but for some markets there are other impprtant factors: * The flood of expat money (Vancouver) * Supply constraints due to geography and/or Nimbyism coupled with net in migration (Bay area) * Builder hesitation plus in migration (Front range of Colorado) Hard to paint one picture. However, making mortgages easier to…
But there are other factors like tax. In the UK for example you generally won't need to pay capital gains tax when selling your main home...
Re: There is more to high house prices than constrained supply
#6>Low interest rates and innovations in the mortgage market may also be to blame Low interest rates and innovations in the mortgage market are to blame You are simply letting a person to buy more of any big, expensive asset. And the thing does gets out of control fast when there is a even minimal expectation of appreciation, and inflation fears. And that on top of the fact that real estate is the only "investment" pos…
Lower interest rates opened housing inventory to more people who were and ready to purchase it at already ridiculously low prices since the market crash of 2008. This is part of what got me into my house.
> You are simply letting a person to buy more of any big
True, but that is grossly incomplete. It suggests that single individuals (or agencies) are gobbling up a plurality of real estate. It is also true that many people are each purchasing single houses.
Also constrained inventory appears to be a reality only on the US coasts. In my geography they continue to build thousands more houses every year. Inventory is hardly limited and yet prices and demand are both continually increasing year over year.
Re: There is more to high house prices than constrained supply
#7I blame investors and speculation.
Re: There is more to high house prices than constrained supply
#8>Low interest rates and innovations in the mortgage market may also be to blame Low interest rates and innovations in the mortgage market are to blame You are simply letting a person to buy more of any big, expensive asset. And the thing does gets out of control fast when there is a even minimal expectation of appreciation, and inflation fears. And that on top of the fact that real estate is the only "investment" pos…
All real estate is local. Certainly the innovations mentioned are part of the issue for most markets, but for some markets there are other impprtant factors: * The flood of expat money (Vancouver) * Supply constraints due to geography and/or Nimbyism coupled with net in migration (Bay area) * Builder hesitation plus in migration (Front range of Colorado) Hard to paint one picture. However, making mortgages easier to…
> All real estate is local.
> The flood of expat money (foreign investment)
these two statements are contradictory
Re: There is more to high house prices than constrained supply
#9The price of houses is driven by market rents compounded with access to financing. If lenders are willing to finance an investment with 3% yield, then house prices will jump to 33x their annual rent value - it goes without saying that's only possible in low interest markets.
The rent itself however is controlled by supply and demand - there needs to be a real person there earning a paycheck and he must have no other options before going for a high rent house. Therefore, the options for keeping rents down are either keeping people out of the city through administrative means, or, realistically, building higher and denser. Good public transport infrastructure is an essential component because it opens for development distant areas that otherwise would not be desirable to people working in the city.
On the other hand, as the city grows, economies of scale bring in more businesses, create more high paying jobs and opportunities, therefore attracting more people - up to the point where rents and commute times increase again and restore equilibrium. A Malthusian catastrophe of sorts, that requires radical new transport solutions and workplace transformations, as opposed to building regulation and financial innovation.
Re: There is more to high house prices than constrained supply
#10Earlier quoted context omitted.
All real estate is local. Certainly the innovations mentioned are part of the issue for most markets, but for some markets there are other impprtant factors: * The flood of expat money (Vancouver) * Supply constraints due to geography and/or Nimbyism coupled with net in migration (Bay area) * Builder hesitation plus in migration (Front range of Colorado) Hard to paint one picture. However, making mortgages easier to…
> All real estate is local. > The flood of expat money (foreign investment) these two statements are contradictory
The supply is local, the demand not necessarily so. Hence Vancouver's recent tax on foreign buyers.