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Why Ireland's housing bubble burst

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121–130 of 161 posts

Re: Why Ireland's housing bubble burst

#121

Earlier quoted context omitted.

It's simply an ineffective way of looking at the world. The government is the one that sets policies, not the developers. To me a government official that accepts a bribe and makes far reaching policies in response to one is much more culpable and to blame than somebody making the bribe. It's like if a company hired a lot of unqualified people and then blamed those people when it failed, rather than their system of c…

I’m curious - in what other contexts do you apply this "logic" ? If the guy who robbed your house and cleared out your bank account bribed the judge to go free, would you then feel that the robber played the system well? Would you be arguing that he doesn’t need to go to jail, only the judge? Because "democracy"?? ... I fucking doubt it. And I imagine you'd feel even worse when you find out that the burglar and the j…

We're talking about a system here. The housing market.

In your example, it's like saying crime is systemically high, and thinking blaming the criminals will solve it. You can and should prosecute individual criminals, but it does nothing to solve the underlying reasons that crime is high.

High crime is likely due to structural factors that the government has control over, and you'll never solve high crime by jailing everybody. Jailing nobody would be a structural factor encouraging high crime, however. But one which the government can be held accountable for.

It's naive to expect to solve societal problems through "shoulds" and not through rules and legislation.

Re: Why Ireland's housing bubble burst

#122

Earlier quoted context omitted.

Birth rates are down worldwide except in Africa, and if I had to forward look based on current developed world policy (Japan, US, Europe migrant policy), I don’t think the US is going to drastically increase immigration quotas. Again, like Japan. Older citizens will want to keep their culture static, and they weight that higher than economic growth.

I think you're drastically underestimating how many people emigrate to America. As of 2018 44 million Americans were born in another country and immigrated here[0], representing one fifth of the world's immigrants. As a percentage of the US' population (13.7), this is very close to the all time high of 14.8% in 1890 . Our immigration wave right now is damn close to the peaks of the Ellis Island period of Italian and…

Birth rates are predicted to keep going down though, meaning the supply of immigrants will dry up anyway.

Re: Why Ireland's housing bubble burst

#123

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…

> Trails of brown envelopes (bribes) have been sniffed out repeatedly, and then left to grow cold. Large scale developments were made and begun without any plan whatsoever to connect them to basic and necessary infrastructure such as sewage, or schools.

Can't argue with this, in fairness.

> The media have pointed fingers at immigrants, dole scroungers, and market forces - anything but policy. They give airtime to politicians who have been repeatedly proven to be actively working against us and caught in lies over and over. They smear anyone speaking truth.

This is just not true. It's almost libellous it's so wide of the mark. I don't know where you're getting this from. Nobody of any substance has ever blamed the crash or the housing crisis on immigrants, people on the dole, direct provision or anything like that. Immigration in particular has been an absolute non-issue the entire time.

> Irish housing policy for the last decade has been to sell property to vulture funds and foreign investors at firesale prices tax free, while the average Irish worker has none of the same advantages and no chance of getting on the ladder whatsoever.

This is not true either. Vulture funds buy non-performing loans (not property, loans), of which there are many, and for which reason we have higher than average mortgage rates. It's distasteful, but without them our current account fees and loan rates would be higher than they already are.

REITs are not vulture funds. They generally build to rent: they finance the construction, and then collect the rent. Without them there would be thousands fewer apartments in Dublin in particular. Cork city went a full decade without a single apartment complex being built. They serve a purpose. They don't pay corporation tax, but they do pay tax. See here: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-c...

The funds swooping in post-construction and buying entire blocks of houses or apartments that would otherwise have gone on the open market, they're a different story. They can die screaming.

> Our government funds landlords with schemes such as HAP (1.5 billion euro directly to landlords since 2017) instead of building fucking houses. They then use those schemes to twist the numbers, pissing in our face and telling us its raining despite clear record homelessness and child poverty. We give foreign companies billions to build houses which we then rent off of them for decades and don't own at the end. It's sheer, clear insanity. And this Oxford chap seems completely unaware, yet wholly confident in his "understanding" of the issues we have.

HAP is a bad scheme. Totally agree. The "Oxford Chap" is a Trinity academic who writes the daft.ie reports on housing in Ireland. He knows what's going on as well as you do.

> This crisis was NOT built on misunderstandings, or myth, or innocent mistakes and apathy. It was CONSTRUCTED. And at every point, the wrong people have profited at the expense of the 40% of Irish who don't own a house.

Nobody manufactured the crisis on purpose. That's tinfoil hattery.

Re: Why Ireland's housing bubble burst

#124
post #101

Earlier quoted context omitted.

House or an apartment?

A house. Let us say 160 sqm with 800 sqm garden. You can buy such property very cheaply somewhere in rural Thüringen, but for Munich, you would have to be a millionaire or close to that status.

You don't > a 160sqm house with a 800sqm garden to raise kids :-)))

You > that house, notice the difference?

I grew up in a very practically designed 2 bed room apartment of about 90sqm. It was more than adequate and to preempt comments, it wasn't "inhumane" or a "slum" or whatever. I'd live there today if Romania as a whole wouldn't have a lot of growing up to do.

A 100sqm apartment, made larger to account for modern sensibilities, is more than enough to raise 2 kids.

Re: Why Ireland's housing bubble burst

#125
post #72
post #64

Earlier quoted context omitted.

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.

The fact that the borrower can renegotiate lower only increases the premium charged for fixed rate loans. It's not free money or free insurance.

Yeah, but I imagine you know that thing about limited upside but potentially boundless downside?

Re: Why Ireland's housing bubble burst

#126
post #59

Earlier quoted context omitted.

Wonder if we’ll have bailouts for the banks or homeowners if interest rates go up. I’m not confident the answer is no.

Banks don't need bailed out if interest rates go up. They have very little exposure to mortgages. They slice up the loans and sell them as MBSes to the Fed and pension funds. If interest rates go up ~1% - pension liabilities decrease ~12%: https://www.pentegra.com/wp-content/uploads/2016/12/The-Impa... This is not terrible for pension funds. The Fed doesn't need bailed out...

> The Fed doesn't need bailed out...

Well, there is sovereign default but if the US does that, then we'd better hold on tightly to our breeches, from Kamchatka to Patagonia.

Re: Why Ireland's housing bubble burst

#127
post #67
post #61

Earlier quoted context omitted.

I lot of people have been making that bet and they haven't been wrong so far.

I mean to be fair they haven’t been wrong in about 40 years except for fluctuations. Although those can be devastating to those stretched thin. Honestly I’m of the opinion we won’t see any serious rise in rates. Too many mortgage holders and indebted governments would be broken. Just look at the last month. The Fed threatens a few hikes that would push a 10 year bond to 2.5-3% and the market crashes.

Yeah, but on the other hand, black swans. We're navigating into uncharted territory and it feels a bit like 1929. And this time we're much more interconnected.

And the thing is, maybe it would be better to blow off some of that steam in small bursts than find our > that 2 days ago was the point of no return.

Re: Why Ireland's housing bubble burst

#128

Earlier quoted context omitted.

I think you're drastically underestimating how many people emigrate to America. As of 2018 44 million Americans were born in another country and immigrated here[0], representing one fifth of the world's immigrants. As a percentage of the US' population (13.7), this is very close to the all time high of 14.8% in 1890 . Our immigration wave right now is damn close to the peaks of the Ellis Island period of Italian and…

Birth rates are predicted to keep going down though, meaning the supply of immigrants will dry up anyway.

There's about 6.5 billion people (and that number is growing!) in developing countries.

You're safe for at least 50 years.

Re: Why Ireland's housing bubble burst

#129
post #100
post #96

Earlier quoted context omitted.

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.

Germans rent a lot. They have the highest rate of rentals in the EU, I'm not sure how this compares to the US. I'd guess Germans rent more than Americans.

Your guess is correct. The American homeownership rate is 65%.

https://fred.stlouisfed.org/series/RHORUSQ156N

Re: Why Ireland's housing bubble burst

#130
post #126

Earlier quoted context omitted.

Banks don't need bailed out if interest rates go up. They have very little exposure to mortgages. They slice up the loans and sell them as MBSes to the Fed and pension funds. If interest rates go up ~1% - pension liabilities decrease ~12%: https://www.pentegra.com/wp-content/uploads/2016/12/The-Impa... This is not terrible for pension funds. The Fed doesn't need bailed out...

> The Fed doesn't need bailed out... Well, there is sovereign default but if the US does that, then we'd better hold on tightly to our breeches, from Kamchatka to Patagonia.

The Federal Reserve wouldn't default. It doesn't owe anyone money. It buys bonds (printing money out of thin air) at favorable interest rates from the US Government.

The US Government defaulting wouldn't impact the Fed's ability to continue to buy infinite sums of assets.

There's no reason that the US Government couldn't default and the Fed buy absurd amounts of treasuries until interest rates remain low or go even lower.

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