51–60 of 110 posts
Not a bad overview, but misses some things (1) political instability (2) $10M/home as sticker price wouldn't happen. Apartments and row homes would be more common substitutes (and already have sopped up demand in the starter home markets) (3) what inflation measures show 10% inflation?
Not a bad overview, but misses some things (1) political instability (2) $10M/home as sticker price wouldn't happen. Apartments and row homes would be more common substitutes (and already have sopped up demand in the starter home markets) (3) what inflation measures show 10% inflation?
5-10% for many things: tuition, healthcare, cars, homes, transportation, etc. I don't see political instability ever being much of a problem. Trump was considered 'unstable' by pundits yet prices surged during his term.
https://politicalcalculations.blogspot.com/2020/01/the-price...
Not a bad overview, but misses some things (1) political instability (2) $10M/home as sticker price wouldn't happen. Apartments and row homes would be more common substitutes (and already have sopped up demand in the starter home markets) (3) what inflation measures show 10% inflation?
Shadowstats[1] shows more than 10% in '80s-based measure. 1. http://www.shadowstats.com/alternate_data/inflation-charts
The price of the average house in the USA is based primarily on the government-guaranteed 30 year fixed rate mortgage. For a given interest rate and income, the house will cost exactly the maximum amount of loan the borrower can get. Banks no longer have any skin in the game - they go through a massive checklist, gather tons of documents, and once they can fulfill their legal mandates they immediately approve the loa…
I've always thought the solution to this was exponentialy increasing property taxes beyond the first property you (or whatever legal entity you create to horde properties) own. I'm dumb, so I'm sure there are reasons this won't work, but it seems like it should.
I'm with the Georgists on this one, which is probably why I hated Monopoly even as a child. https://en.wikipedia.org/wiki/Georgism
At least the US had a small housing crash in 09/10, most of the rest of the world hasn't seen that so its been 3 decades of non-stop boom. It has to add badly. I thought the baby boomers retiring would cause a lot of downsizing but that just hasn't happened.
Canada barely saw a blip during 2008. The average house price peaked at over $700,000 this summer. That's not Toronto or Vancouver, that's Canada as a whole, including places like god damn middle of nowhere BC. It did drop to the mid-600's after that.
In the mean time the US average house price went from mid-$200k to mid-$300k over the past few years.
I've always thought the solution to this was exponentialy increasing property taxes beyond the first property you (or whatever legal entity you create to horde properties) own. I'm dumb, so I'm sure there are reasons this won't work, but it seems like it should.
This would just get passed on to the renters.
There's countless studies that support this conclusion, the best of which is this one out of Denmark that, unlike preceding studies, gets around the endogeneity ambiguity by virtue of an exogenous effect:
https://web.archive.org/web/20201108135554/https://dors.dk/f...
I can cite like 10 more articles that support this conclusion.
This is generally the same thing from the other point of view?
Let’s put aside conversion of housing units to vacation stays. That’s a separate issue roiling some housing markets (and not others — some states have already dealt with the Airbnb problem)
Then, what you’re left with is that when a house goes on the market either a family buys it and pays mortgage however much they can afford or an investor buys it and… rents it to that family however much the family can afford. The investor is screwed if rent doesn’t cover mortgage, especially if they are over leveraged. Over time the math works out that the monthly costs of renting and owning are similar. Typically if it seems out of wack, it’s either because there’s a bubble and prices will crash or there’s a boom in the economy and rent is about to join home prices in the stratosphere.
The real difference between rent/buy now vs then is the difficulty affording a down payment in a low interest rate environment when asset values are bloated, and risk of being underwater if interests rates ever rise significantly.