71–80 of 165 posts
I wonder if this is due to stagnant wages, excessive home price inflation, or both.
I almost don't want to buy property as a protest to the horrible policies we have regarding basic necessities. Why should property owners be entitled to a major portion of my productivity/success? I'll rent the cheapest apartment I can find until the next housing crash or we have some sensible policy put through that negates the investment aspect of housing.
Is property ownership a basic necessity though? Or is its prevalence as an ideal a product of a burgeoning middle class through the last century? I understand it's not even so common (or common as a goal) now in continental Europe, they think it's some silly English thing to care so much about home ownership.
You have very few rights (even in comparison to Wales or Scotland). So landlords use you for example to live in a property they plan to sell immediately. Typically they sign a rental contract and shortly afterwards advertise the house for sale. You need to cope with all the viewings, probable breaches in the tenancy (agents will enter the house quite often without notice) and the certainty that after ~6 months you will need to relocate again (which also impacts your credit score).
My experience renting in other places in Europe is, in comparison, fantastic. Totally boring (in a good way) experiences in Scandinavia, Germany and Belgium. Rent, pay, stay undisturbed for years, return keys, get deposit back and go. Also much lower prices.
In late 1980s Melbourne, Australia my dad and his best friend were accountants and bought their houses for ~$40,000AUD, ~3 times their annual income. According to the best friend, this was considered a lot to pay for a home. In 2020, those houses are around ~$1.8-2M, so ~22.5-25 times the annual income of someone that has their job today. In Melbourne and Sydney generally, housing is 10 and ~13x annual income. Above…
The problem is the asset bubble in home ownership prices. We should have 10+ year secured residential tenancies and rent controls in place, and put home ownership back into the 3-5% compounding asset class. Sydney and Melbourne is insane. Brisbane (where I live) is better, but only just.
I worry about Hobart: the longterm income levels in Tasmania are not going to keep up, the price of housing there is creating a huge social dislocation issue.
Earlier quoted context omitted.
I doubt you can lay all the blame on prop 13. It passed because CA home prices went crazy in the 70s. My parents bought a home in 1973 for $34k and sold it for $95k in 1978 (the year prop 13 was enacted). A 3x increase in 5 years.
All the blame? No. Most of the blame? Probably. The same that happened to your parents happened to landowners of huge properties. They still pay peanuts for property tax 40 years later. In the end - it helped people who got there first and then screwed everyone else over. It helped rent seekers more than anything.
Earlier quoted context omitted.
yes, but in many desirable areas a significant portion of buyers are cash only buyers whose monthly payment is $0 (other than property taxes).
Intuitively, I would say the number all cash buyers is a pretty small number in every market. Especially in a low interest rate environment. Most people with the means to pay cash for a property would likely be savvy enough to understand that that they would be better off getting a jumbo mortgage at 3.25% and deploying that capital at a higher rate elsewhere.
In late 1980s Melbourne, Australia my dad and his best friend were accountants and bought their houses for ~$40,000AUD, ~3 times their annual income. According to the best friend, this was considered a lot to pay for a home. In 2020, those houses are around ~$1.8-2M, so ~22.5-25 times the annual income of someone that has their job today. In Melbourne and Sydney generally, housing is 10 and ~13x annual income. Above…
Under such conditions, wages can only stagnate or have modest growth, while prices for scarce resources like land in desirable areas can only go up.
Good news is that there are still cheap places everywhere. But everyone treats them like they're all plague infested or something. Building a new town/city is no easy feat, but it sure used to happen more often in the past.
Say what you will about Texas government, but they know how to stay out of people's way and let housing supply keep up with demand efficiently. California on the other hand, is absolutely pathetic when it comes to this. So absurd watching a state whose booming economy is funneling most of that money to property owners pockets. A huge and abject failure that will be in future economics textbooks as the example of how…
I almost don't want to buy property as a protest to the horrible policies we have regarding basic necessities. Why should property owners be entitled to a major portion of my productivity/success? I'll rent the cheapest apartment I can find until the next housing crash or we have some sensible policy put through that negates the investment aspect of housing.
Is property ownership a basic necessity though? Or is its prevalence as an ideal a product of a burgeoning middle class through the last century? I understand it's not even so common (or common as a goal) now in continental Europe, they think it's some silly English thing to care so much about home ownership.
In prior generations, rent was a way to express a preference about longterm vs. short term occupation of a given space, or it was a way for people with relatively little credit or capital to get access to space. But it seems impossible for purchase prices to perpetually outpace rent prices, and it is unsettling to imagine the fraction of the economy dedicated to land ownership growing perpetually.
I used to make about $600K/yr salary in SF and couldn't imagine affording a home there that I'd feel comfortable with a 30-year mortgage payment on.
I am not sure how much money I would need to make to do this.
My worry is that I lived through 2 recessions and we'd almost certainly lose everything if I lost my job and couldn't afford the mortgage.
Earlier quoted context omitted.
All the blame? No. Most of the blame? Probably. The same that happened to your parents happened to landowners of huge properties. They still pay peanuts for property tax 40 years later. In the end - it helped people who got there first and then screwed everyone else over. It helped rent seekers more than anything.
That is a flaw of Prop 13, but I don't see how it drives home prices up? Wouldn't it motivate devleopers to build properties to rent out because of a long term margin improvement in the profit? (because the property tax rises are constrained below most inflation).