71–80 of 161 posts
It's like this guy has never heard of a speculative bubble, and sets up a series of straw men to nock down instead. Even though "bubble" is in the title. Edit: oh I get it, his point is that yes there was a bubble, and that's why prices went up. Without extra supply it would have been worse. I think that's putting the horse before the cart, because without the bubble the extra supply wouldn't have been built. This po…
Earlier quoted context omitted.
If that is the case, then banks in US are taking the same "ridiculous" trade by offering fixed rates to almost everyone, and will be decimated by any kind of interest surge. It's not clear to some countries stick almost exclusively to fixed rate mortgages, and others stick almost exclusively to variable rates, but the people in "variable rate countries" have saved a lot of money historically.
Banks package the loans into bonds which are then sliced up and sold to investors. Banks aren’t really in the speculation business as much as the underwriting business when it comes to mortgages. Fixed rates are always a better option for the person borrowing the money as you can refinance if rates go lower, lowering your monthly payment. Variable rate loans are far more regulated for a reason.
Earlier quoted context omitted.
>That's driven by the farmland bubble. [...] >The gigantic gains seen, which bring up the country average, are limited to the prime agricultural areas, namely Toronto and Vancouver, where farmers are now willing to pay more than developers for undeveloped land. Something that is historically unusual. Why is farmland in those areas so sought after? Were canadian farmland historically underpriced? Is the land just real…
1. High prevalence of supply managed (dairy, poultry) producers. These farmers are effectively guaranteed a high income through policy. Said income provides a lot of room to buy land with. Further, the way into these sectors is to buy what we call quota. Dairy farmers in Ontario imposed a price cap on quota back in 2006 in an effort to make it accessible to young farmers. While the fair market value of quota has like…
It's interesting because back in the 2000's that was the main talk about how Urban Sprawl was going to ruin everything!
Anything else wildly perverts monetary policies. The mortgage market is suddenly the real bond market, there's extreme moral hazard, there are either explicit mortgage market safety nets or quasi-nationalized mortgage providers, etc. It becomes a weird monetary policy slush fund that is incidentally also where people live.
I object to the characterization of Ireland's housing issues as somehow accidental, or solely due to broad market forces. At every major decision point there were intelligent people screaming in the ear of media and politicians that property developers were getting away with murder. I knew teenagers who emigrated as the writing was so clearly on the wall, and the entire time our print and TV media were inflating the…
How can the blame be put on property developers? Most of property costs can be tied to government policy, re: zoning, interest rates, tax laws etc. The government is usually always the one that could fix the problem by encouraging building. E.g. in the US we have an 18% tariff on Canadian lumber, which artificially increases cost to build (though is meant to protect domestic lumber industry). Many municipalities have…
I object to the characterization of Ireland's housing issues as somehow accidental, or solely due to broad market forces. At every major decision point there were intelligent people screaming in the ear of media and politicians that property developers were getting away with murder. I knew teenagers who emigrated as the writing was so clearly on the wall, and the entire time our print and TV media were inflating the…
How can the blame be put on property developers? Most of property costs can be tied to government policy, re: zoning, interest rates, tax laws etc. The government is usually always the one that could fix the problem by encouraging building. E.g. in the US we have an 18% tariff on Canadian lumber, which artificially increases cost to build (though is meant to protect domestic lumber industry). Many municipalities have…
The easiest answer is that property developers are ultimately responsible for policies in legal and not exactly legal ways.
Earlier quoted context omitted.
He covered the empty estates issue well enough I thought: by the mid-2010s they were mostly fully constructed and occupied, including in rural areas. That chimes with my experience, having lived in a few different parts of the country (urban and rural) over that time period. It was rare for completed housing estate to be bulldozed.
You will find that you are wrong about the occupation rates in rural areas, it's still at around 180000 unoccupied dwellings at the last count. Misleading not to make the distinction between Unfinished and Empty just to make a point, leaving out half the story in numbers terms. The article would have been more accurate if the titles of the 'Myths' were about Dublin and not Ireland. I don't have figures for the amount…
I spend a lot of time in rural Ireland (ok, in the eastern, wealthier, part). This figure doesn't really reflect what I see on the ground, which is scarcity of supply - you got sources for that figure, preferably with a breakdown by region?
I object to the characterization of Ireland's housing issues as somehow accidental, or solely due to broad market forces. At every major decision point there were intelligent people screaming in the ear of media and politicians that property developers were getting away with murder. I knew teenagers who emigrated as the writing was so clearly on the wall, and the entire time our print and TV media were inflating the…
How can the blame be put on property developers? Most of property costs can be tied to government policy, re: zoning, interest rates, tax laws etc. The government is usually always the one that could fix the problem by encouraging building. E.g. in the US we have an 18% tariff on Canadian lumber, which artificially increases cost to build (though is meant to protect domestic lumber industry). Many municipalities have…
Remember how I talked about housing estates being built where there was no desire or infrastructure there? They did this by taking advantage of human psychology. When people turned out against a development, they'd simply resubmit the proposal in 6 months or a year and this time people would be fatigued and not fight it. I have personally heard them talk about doing this with my own ears. They made backhanders to politicians, they paid off newspapers and TV stations, they made deals with substandard suppliers.
And why did they do this? There was huge money in it. Government funds, aforesaid substandard materials, treating workers like shit. Ever way the system could be gamed it was gamed; and they didn't even try all that hard to hide it.
Look up CRH, Ireland's concrete cartel. Look up mica blocks in Donegal. Look up NAMA corruption. There's more than enough information out there to put all the pieces together but media and Gardai refuse to do so. Half the population is aware of how fucked all this is and it remains an open secret; so seeing revisionist wank coming out of Oxford academia is actually offensive.
... So, developers got paid. Media got paid. Establishment politicians got paid. Banks got paid repeatedly, as did their bondholders. Everyone got paid except for the people, who were and are being cynically and systematically fleeced before, during and after each boom bust cycle.
Earlier quoted context omitted.
If that is the case, then banks in US are taking the same "ridiculous" trade by offering fixed rates to almost everyone, and will be decimated by any kind of interest surge. It's not clear to some countries stick almost exclusively to fixed rate mortgages, and others stick almost exclusively to variable rates, but the people in "variable rate countries" have saved a lot of money historically.
Banks package the loans into bonds which are then sliced up and sold to investors. Banks aren’t really in the speculation business as much as the underwriting business when it comes to mortgages. Fixed rates are always a better option for the person borrowing the money as you can refinance if rates go lower, lowering your monthly payment. Variable rate loans are far more regulated for a reason.
Check how variable rates and fixed rates have compared over time
Basically, the "fixed rate" very rarely was smaller than the floating rate.
Banks know how to calculate the rate ceiling and you're rarely going to win by betting against it. (Why would they risk borrowing it at a smaller cost than the given interest rate at a given time?)
Sure there's a risk of interest shock, that risk is not zero. You can mitigate it by a) not buying something overvalued and b) having a big enough downpayment