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Like others in this thread I'm not an expert, but it seems to me that the thing every cyclical housing market has in common is a heavily subsidized/credited/backed mortgage market. I think the counterexample is Germany? They build a good amount of housing every year, they watch housing prices very carefully and pull some levers if they tick up or turn down, and they don't store a huge amount of their population's wea…
Germany also has a much more decentralized economy and more spread out population compared to other European countries. There is no city equivalent to London, Paris or Dublin. For example Berlin's population only started growing in the 2010's (it's was stable or declining since the 1990's) and prices have been growing quite rapidly lately so arguably it just a few years (or decades) behind other major European cities…
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> money out of a bubble has to go somewhere... Inflation. Food, bills, gas, etc. > How far are we from the boomer generation leaving the market (one way or another)? 20-30 years, during which time the younger generations will be entering. They are smaller slightly but most countries have immigration which keeps them fairly neutral. > The answer to that is that we've been doing that already in the past decade with all…
Your food and gas bill goes into the income statement of a corporation somewhere, and thus supports stock values. Even if stock prices decline, they will be better value because the companies will be making money
Thus, BigCorpFood has to manage price (too expensive and less consumers buy their products) and cost (too much cost means no profit).
BigCorpFood would really like to sell you a hundred frozen burritos at $0.99 that cost them $0.09. That would be ideal.
Less ideal but realistic would be selling you frozen burritos at $2.99 that cost $2.79
Even less ideal - but still workable for short periods of time - is selling you burritos for $2.99 that cost $3.10
What BigCorpFood doesn't want is to sell you frozen burritos at $9.99 that cost $9.79. That is really bad for them. They will sell very few of those burritos, and make almost no profit.
BigCorpFood stock price is more about introducing "New Deluxe Spicy Chicken Burrito, available for $3.10!" that cost $2.75. If eg Beef is getting more expensive and BigCorp can sell you cheaper chicken thigh and save a profit margin, that will help their stock a whole bunch.
ps: Oh, and re "your food/gas prices go into the income statement..".No, they go into the revenue statement. Income = Revenue - Cost.
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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…
Most of the government policy at the time can be tied to bribes by developers. Look up "brown envelopes"[0] or the subsequent Mahon (formerly Flood) tribunal. https://www.rte.ie/news/2003/0501/37800-flood/
People lobby for different things all the time, it's the government that sets the rules. The only power public has is to vote out those officials, or lobby the other way.
There were structural, government induced factors that helped lead to the 2008 GFC in the US too. You could blame irresponsible buyers, or the banks, but it's the government regulation that is the only thing that can structurally fix problems. Blaming actors within the system devised by govt doesn't solve anything, however cathartic it may feel.
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> Fixed rates are always a better option for the person borrowing the money 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…
> Basically, the "fixed rate" very rarely was smaller than the floating rate. Well that's obviously expected. But by taking an fixed rate loan you're basically betting that the rate will increase in the future. Of course there's a risk that the interest rates will stay close to zero for the next 30 years like in Japan.
Like others in this thread I'm not an expert, but it seems to me that the thing every cyclical housing market has in common is a heavily subsidized/credited/backed mortgage market. I think the counterexample is Germany? They build a good amount of housing every year, they watch housing prices very carefully and pull some levers if they tick up or turn down, and they don't store a huge amount of their population's wea…
Meanwhile in Toronto a house is $1m+ while salaries are 100k-150k.
A house in Prague will cost you about 600k USD, but the average salary after tax is something like 21k USD. Welcome to Europe :)
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Your food and gas bill goes into the income statement of a corporation somewhere, and thus supports stock values. Even if stock prices decline, they will be better value because the companies will be making money
The prices are raising due to fundamental cost. The cost of making your Big Mac or frozen burrito are increased. Thus, BigCorpFood has to manage price (too expensive and less consumers buy their products) and cost (too much cost means no profit). BigCorpFood would really like to sell you a hundred frozen burritos at $0.99 that cost them $0.09. That would be ideal. Less ideal but realistic would be selling you frozen…
Also: sales is recorded on the income statement, no-one claimed that sales = income.
Meanwhile in Toronto a house is $1m+ while salaries are 100k-150k.
That's driven by the farmland bubble. Southern Ontario farmland prices are up 700% since the mid-2000s, which has priced urban sprawl out of the market. With Toronto (i.e. the cities around the City of Toronto) unable to expand like they once were able able to, that has increased buying pressure on the land that is already within the city limits, thereby also driving up the cost of housing in those cities. While Cana…
Like others in this thread I'm not an expert, but it seems to me that the thing every cyclical housing market has in common is a heavily subsidized/credited/backed mortgage market. I think the counterexample is Germany? They build a good amount of housing every year, they watch housing prices very carefully and pull some levers if they tick up or turn down, and they don't store a huge amount of their population's wea…
I think the biggest difference between Germany and Anglo-Saxon markets is that houses here aren't a commodity. People rarely move out of and sell houses. Most owners buy once in their lifetime. Consequently, houses sold are quite old on average and often not worth much.