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A Growing Problem in Real Estate: Too Many Too Big Houses

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Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#61

Post by simonh »

pjc50 wrote: post #57
simonh wrote: post #53

Earlier quoted context omitted.

Loss of wealth is never good for anyone. Start with the waste of resources – money was spent on pointless construction and creation that have much lower value than expected. Empty unsold houses benefit no one. Those resources could have been used productively for long term benefit. It’s in all of our interests to discourage the waste of resources like that and encourage productive uses. Then there’s the re-allocation…

> If a couple make a loss of $1m selling a house, then they may need to liquidate $1m of savings to cover the loss This doesn't make sense? Firstly, the point at which the capital was withdrawn from savings was the time the house was built - savings turned into a physical capital asset. That house has lost value, but that doesn't affect liquidity. Secondly, there's a global capital glut to start with - that's why int…

The couple sells the house and then wants to do something else with the money they get back. Maybe they buy another house or give money to their children or both. They still want to do those things, but they have $1m less from selling the property than they expected, so they liquidate $1m in savings which they wouldn't have otherwise needed to do. Alternatively they spend $1m less, or invest $1m less, which is $1m less revenue or capital for people and businesses in the rest of the economy. Either way it's not good.

It's a bit simplistic, but the point is there is a real loss of wealth in society. If the house is sold the new buyer got a bargain, but they probably just got more house for the same money spent on their side. That's good for them, but on that end of the transaction it's likely to be roughly economically neutral, in terms of the whole economy.

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#62

Post by charlesdm »

pjc50 wrote: post #5

This is not only "first world problems", but 1% first world problems. Well, maybe 5%: given > For their retirement in a suburb of Asheville, N.C., Ben and Valentina Bethell spent about $3.5 million in 2009 to build their dream home: a roughly 7,500-square-foot, European-style house with a commanding view of the Blue Ridge Mountains. Put $3.5m into https://dqydj.com/net-worth-percentile-calculator-united-sta... and yo…

I would hardly call a 150m2 home a "mega home", even in London.

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#63

Post by circlefavshape »

coldtea wrote: post #32
circlefavshape wrote: post #9

Earlier quoted context omitted.

Oh come on. My youngest will be 18 in 8 years, so I should be squeezed out of my 180m2 (1800 square foot) home when she goes to college? When I'm 55?

As if 150, 120, even 100m2 homes aren't big enough for a couple, and anything below 180m2 is "squeezing"?

Haha, sorry - bad choice of word there. I simply meant "forced to leave"

The issue isn't whether it's big enough - it's that it's my home.

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#64

Post by tomatocracy »

pjc50 wrote: post #58
tomatocracy wrote: post #48

Earlier quoted context omitted.

Part of the idea of the ‘poll tax’ was also to increase accountability of local government by making it more transparent - ‘why do you charge twice what the neighbouring council does?’ Council tax actually is relatively progressive when you consider that council tax benefit is also part of the system. Very few areas have a large number of band H homes - parts of central London do, but even there you might be surprise…

> ‘why do you charge twice what the neighboring council does?’ It turns out that most council costs are things they are statutorily obliged to do, and rate rises are capped by the government, so council tax rates are largely an indicator of the ratio of taxpayers (including businesses) to service users.

Well, yes. A lot of things are done at local authority level for no good reason - although it’s also true that relatively little of that is services where they have zero influence over the cost - they can spend efficiently or inefficiently and offer gold plated services or bare bones. The system was more transparent than comparing band D tax which is what happens now because some local authorities are mostly low band stock and some mostly high band, and that in turn is more transparent than the old rates system.

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#65

Post by chrisan »

hsnewman wrote: post #27

We built a 4200 sq/ft home 8 years ago, now trying to sell it in a gated community. The more expensive homes around ours are selling, ours has sat for over 3 months. We have alot of traffic seeing the house but because it doesn't have all the extras (pool, outdoor kitchen, etc) people are not buying. Sad.

Perhaps you need a further price adjustment to account for the lack of extras?

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#66

Post by tomatocracy »

TheOtherHobbes wrote: post #52
tomatocracy wrote: post #48

Earlier quoted context omitted.

Part of the idea of the ‘poll tax’ was also to increase accountability of local government by making it more transparent - ‘why do you charge twice what the neighbouring council does?’ Council tax actually is relatively progressive when you consider that council tax benefit is also part of the system. Very few areas have a large number of band H homes - parts of central London do, but even there you might be surprise…

The difference between a multi-million pound mansion owned by an offshore holding company on behalf of a billionaire and sort-of-okay almost affordable housing is usually only a few hundred pounds a year. And accountability has clearly not been improved in any way. In fact billionaires rarely pay council tax at all because councils rarely chase them. There's no point sending bailiffs to an empty property protected by…

How many multi-million pound mansions owned by billionaires who never visit do you think there are in the UK? It’s a tiny tiny number in the context of the country as a whole.

And councils can and do apply to the court for charging orders against the property itself, then force a sale. Offshore companies as owners are not immune in any way.

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#67

Post by masklinn »

johnchristopher wrote: post #39
alkonaut wrote: post #28

Earlier quoted context omitted.

I don't get why you'd want to build an enormous house for your retirement ? If anything, I long for the day my kids leave and I can move to a "simpler" place where I don't need to worry about, or pay for, maintainnig a detatched house. What does a rich older couple do in 7500sq ft/700sq m? I'd run out of ideas for rooms after about 200 sq m, and then I'm left to clean the remaining 500 sq m. anyway...

My grandmother is living alone at the moment in a house where she and her husband raised 4 boys, each with their room and a bathroom for the children at the first floor and a bedroom, an office, a kitchen and a living room at floor level. There's also a basement with a parking space for the car and three rooms and a laundry room. And it's surrounded by a 0.35 acres garden. Yet, it's cheaper to live in the empty house…

Staying in the home you own and have raised your family in makes sense (my own grandmother is in the same situation). The article is not about that, it's about people who decide to move to gigantic "dream homes" as they reach retirement age, and apparently we're supposed to feel bad that they have a hard time selling them for more than they built them.

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#68

Post by masklinn »

charlesdm wrote: post #62
pjc50 wrote: post #5

This is not only "first world problems", but 1% first world problems. Well, maybe 5%: given > For their retirement in a suburb of Asheville, N.C., Ben and Valentina Bethell spent about $3.5 million in 2009 to build their dream home: a roughly 7,500-square-foot, European-style house with a commanding view of the Blue Ridge Mountains. Put $3.5m into https://dqydj.com/net-worth-percentile-calculator-united-sta... and yo…

I would hardly call a 150m2 home a "mega home", even in London.

Apparently, the average home in the jurisdiction of Westminster council is 100m²: https://www.telegraph.co.uk/news/2018/11/13/mega-homes-banne...

There's also the issue that house prices are insane:

> Earlier this year, the council banned a 1,590 square metre, £40m, mega-home

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#69

Post by tomatocracy »

TheOtherHobbes wrote: post #51
tomatocracy wrote: post #44

Earlier quoted context omitted.

It’s largely internal migration driving that effect in the UK, not external migration or financialisation. Children go to university and never come back. The good jobs ARE largely in London and the South East, and people follow their friends creating a network effect too. It’s also not new - it’s been going on since the end of the Second World War pretty much.

The jobs are in London, but so are the costs. In terms of living expenses, the cost/benefit ratio for other cities is much higher. The real benefit of London is the networking and the culture. There's a lot of both - more so than elsewhere. Whether it's worth the insane housing costs is debatable.

Housing costs aren’t insane in the commuter belt if you have a decent job in London. Most people working in London don’t live in London. Good job in London, house in the South East, commute by train, still looks better to a lot of people than poor job in a rural area of the North or Wales and getting a less good house.

Of course there are some professions where the equation works the other way - medicine being one obvious example.

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