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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

#71

Post by tomatocracy »

pjc50 wrote: post #56
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.

London's population dropped for a long period after the war: https://www.washingtonpost.com/news/worldviews/wp/2015/01/07... > The good jobs ARE largely in London Well, yes. Each individual is only doing what's best for their circumstances. What I'm questioning is whether this is how it has to be, this centralisation, and whether good jobs could be distributed round the country a bit more by some policy choices.

Yes, London’s population shrunk into the late 80s as people moved out of city centres but the South East grew very quickly in the postwar era - more than offsetting this effect. Since the 90s, both have been growing.

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

#72

Post by gdfasfklshg4 »

TheOtherHobbes wrote: post #49
smcl wrote: post #21

Earlier quoted context omitted.

You need to be careful when dismissing caution about the elderly who have - through whatever means - found themselves living in a valuable property. The following are just as likely: - a wealthy individual with many properties who can easily afford a few extra hundred quid a month - someone living just above poverty level in a property in a previously modest area that, thanks to a gentrification, has exploded in valu…

I think if someone is in a huge house they're barely using and possibly not even maintaining, there isn't a massive issue with gently incentivising them to move somewhere smaller. There especially isn't an issue with a redistributive land tax rather than a property tax. That would take money from corporate landlords and move it back into the rest of the economy. You have to balance your caution with the reality at th…

And you have to balance your optimism with the fact that your solution will cause lots of old people (who maybe should have downsized 10-15 years ago) to be forced to downsize now and who would then lose the ability to live independently.

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

#73

Post by cr0sh »

pjc50 wrote: post #41
Blackstone4 wrote: post #4

We have a similar issue in the UK since there are large houses being occupied by older couples whose children have left. Since annual property taxes are low (~4k - we call it council tax) and tax on buying property (stamp duty) is high, there is no incentive to move to a smaller place.

The UK also has Stoke-on-Trent giving away houses for £1 in a desperate attempt to unblight the place. The UK's problem is not so much lack of houses (although the planning system really doesn't help) as a combination of over-financialisation and over-centralisation. People believe that all the high-paying employment, entertainment, and oligarch money is in London. It's also the default destination for immigrants. As…

> The UK also has Stoke-on-Trent giving away houses for £1 in a desperate attempt to unblight the place.

I'm kinda curious what you mean by this?

I just did a brief (didn't look at all areas) google maps tour of the area, and while I know that isn't in any way the best to assess an area, I was struck by a few things:

1) Things seem pretty quiet - little vehicle traffic, but also few people walking about, even in the "city proper".

2) Buildings seem fairly diverse; some newer, some older. Most in seemingly decent shape; a few in need of repair.

3) Some interesting shops and restaurants (saw one small restaurant called "Planet Bollywood" - heh).

4) Housing neighborhoods and such seemed and looked nice.

I guess what I'm trying to get at is that I didn't see anything that looked like "blight"; maybe I didn't look in the right areas, or maybe my concept of blight is different?

When I think of blight, I think of empty lots with weeds chest high, trash dumped, broken down and/or burned out buildings, etc - stuff in extreme states of disrepair or needing condemning and removal/cleanup.

I didn't see anything like this; but again, I didn't look everywhere. Where I did look, the worst I saw was perhaps some buildings that needed some basic upkeep and maintenance (at least, from the outside).

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

#74

Post by imgabe »

simonh wrote: post #53
imgabe wrote: post #29

Why is this a problem? Some very rich people become a little bit less rich. None of them seem to be in danger of falling into penury over only getting $1M for their house instead of $2M. Sounds like the supply and demand working the way they're supposed to.

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…

I see what you're saying. In any healthy economy though, there are going to be some people who make investments that lose money. That money gets redistributed to the workers they employ and circulates out through the rest of the economy. We need people to risk money in order to have the economy function. Necessarily some of those risks won't work out, but this should not be an existential threat to the economy as a whole.

A house, especially a luxury house, should be considered a purchase and not a store of value. The actual physical materials of the house only depreciate over time. Sometimes the underlying land can go up in value if it's in a desirable area, but that's not the case here.

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

#75

Post by pjc50 »

cr0sh wrote: post #73
pjc50 wrote: post #41

Earlier quoted context omitted.

The UK also has Stoke-on-Trent giving away houses for £1 in a desperate attempt to unblight the place. The UK's problem is not so much lack of houses (although the planning system really doesn't help) as a combination of over-financialisation and over-centralisation. People believe that all the high-paying employment, entertainment, and oligarch money is in London. It's also the default destination for immigrants. As…

> The UK also has Stoke-on-Trent giving away houses for £1 in a desperate attempt to unblight the place. I'm kinda curious what you mean by this? I just did a brief (didn't look at all areas) google maps tour of the area, and while I know that isn't in any way the best to assess an area, I was struck by a few things: 1) Things seem pretty quiet - little vehicle traffic, but also few people walking about, even in the…

https://www.stokesentinel.co.uk/news/you-qualify-buy-1-house... was what I was referring to.

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

#76

Post by coldtea »

circlefavshape wrote: post #63
coldtea wrote: post #32

Earlier quoted context omitted.

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.

Yeah, that's totally fair! People shouldn't be forced to leave their houses because of rising taxes...

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

#77

Post by wlesieutre »

bilbo0s wrote: post #43
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 last kid is leaving for college in less than 2 months, and I'm right there with you. I need a place big enough for me, and for the visit of kids. (And hopefully, grandkids?) But that's nowhere near 700 sq m. To be honest, I didn't even need 700 sq m to raise kids in. Some people are just so rich that enormous homes like that make sense to them. But then they are so out of touch that they don't realize that very fe…

For the imperial folks, 700 sq m is about 7500 sq ft. That's big.

It's tough for me to imagine using that much space, it's just going to accumulate dust. But then again, the people building houses that big probably just hire someone to dust it for them.

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

#78

Post by maxsilver »

mruts wrote: post #6
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 mean, not really. I knew plenty of people buying new mcmansions on credit when their household income wasn’t above 80k. Many many Americans over leveraged themselves by buying up huge properties with no down payment.

People use two different definitions of "McMansion", to mean wildly different things.

To some people, a "McMansion" is any single family house they happen to dislike. Those are the kind of things working-class people buy on credit. (Homes in the 1200sqft to 2400sqft range). These are basically cheap disposable housing, they are popular because all people have to have somewhere to live, and this is usually the cheapest possible housing available that's still slightly comfortable to inhabit.

This article is not talking about those. This article is talking about actual McMansions or just real Mansions, homes in the 5000sqft to 8000sqft+ range. They're like 2x to 4x bigger than a typical house (even when using American sizes for 'typical house'). No regular person owns these, you have to be entirely in the "wealthy" category to even begin to look at them.

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

#79

Post by camelNotation »

Blackstone4 wrote: post #4

We have a similar issue in the UK since there are large houses being occupied by older couples whose children have left. Since annual property taxes are low (~4k - we call it council tax) and tax on buying property (stamp duty) is high, there is no incentive to move to a smaller place.

What about the headache of maintaining a big home? I've seen what it is like to care for a large home. It's a nightmare, whether you have money or not. Every pool, every gymnasium, every commercial-grade appliance, etc. They all require maintenance, repair, and eventual replacement. To do that, it costs a lot more and the available labor is much more limited. You have to wait weeks for some guy who lives two states away to come in and work on your elevator and when he gets there he charges you an unbelievable amount of money to do basic things. And when things aren't broken, you have to always be renovating or updating something. Things that look like they are aging or out of style don't signal your status because they tell your guests and visitors that you have a big home, but maybe can't afford it. So you're always updating. Always renovating. It's all a show.

The idea of dealing with all of these "luxuries" is awful to me and I've seen wealthy people who didn't have to work basically turn home maintenance into their job because it required just as much time and stress as anything else. What is the point of wealth if things you use it for give you just as much headache as a middle class person's job?

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

#80

Post by Blackstone4 »

gdfasfklshg4 wrote: post #60
Blackstone4 wrote: post #16

Earlier quoted context omitted.

I feel that it was not "extremely misleading" within the given context which referenced older couples in larger properties. In this case, they are the ones typically paying the council tax. I agree with you that the UK needs property taxes to be paid for by the owners. This would help reduce speculation and encourage utilisation of the existing housing stock. But as another post has mentioned, objections include "thi…

> But as another post has mentioned, objections include "think of the old people who are worth $1m+ in property but would have to move out because they have low income"....boohoo... Cruel. There are plenty of old people that are able to keep living in their existing home because it is familiar but would be unable to live independently in another home.

I guess it depends on your perspective. It may mean pain for some and relief for others with a view to moving towards a more optimal solution for society as a whole. How can we use our housing stock more effectively?

As things stand, people defend the status quo when young people and those on lower incomes are struggling with high rents and property prices. Some have kids and have to share rooms and live in small properties. Others may end up debt slaves for the rest of their lives.

>There are plenty of old people that are able to keep living in their existing home because it is familiar but would be unable to live independently in another home.

If they have a net worth of $1m+, I'm sure they can afford to pay for care. I am not talking destitue, improvished individuals.

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