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Why Ireland's housing bubble burst

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Re: Why Ireland's housing bubble burst

#121

Post by refurb »

chgs wrote: post #91
refurb wrote: post #39

Earlier quoted context omitted.

Canada had a massive housing crash in 1990. Housing pricing dropped in Toronto by 30% on average (less in the core, up to 50% in the suburbs). Home owners were screaming for relief. If you bought in 1989, you didn’t break even accounting for inflation until 2005 or later. The last decade has been Groundhog Day compared to the 80’s. Complaints of limited supply, people saying “these prices are the new normal”, people…

People comparing income multiples in the 80s with today aren’t factoring the increased number of two income families, or even more. In london there are many houses which in the 80s had one income, maybe one and a part time which today have 4 or 5 incomes in a HMO. Meanwhile empty housing is at very low levels and barely makes a dent (about 1%) When you have 4 professional adults sharing a 3 bedroom house, there’s a s…

> People comparing income multiples in the 80s with today aren’t factoring the increased number of two income families, or even more.

Two income families were common by the eighties. Women's participation in the workforce was >50% by 1980 and has only increased to 60%.

https://ourworldindata.org/female-labor-supply

Re: Why Ireland's housing bubble burst

#122

Post by acdha »

refurb wrote: post #121
chgs wrote: post #91

Earlier quoted context omitted.

People comparing income multiples in the 80s with today aren’t factoring the increased number of two income families, or even more. In london there are many houses which in the 80s had one income, maybe one and a part time which today have 4 or 5 incomes in a HMO. Meanwhile empty housing is at very low levels and barely makes a dent (about 1%) When you have 4 professional adults sharing a 3 bedroom house, there’s a s…

> People comparing income multiples in the 80s with today aren’t factoring the increased number of two income families, or even more. Two income families were common by the eighties. Women's participation in the workforce was >50% by 1980 and has only increased to 60%. https://ourworldindata.org/female-labor-supply

What’s the income like, though? The further back you go, the more women were held back on hours or career advancement, while many traditionally male occupations had more opportunities & security. The World Bank figures that site uses include anyone who is “economically active” so a household in 1980 with a full-time father and a mother working part time at much lower wages still count as a two-income family the same as a dual-lawyer couple in 2020. The more interesting figure for me is the pay disparity halving over that period, which sounds like a lot of women moving from lower skill/hour jobs to better paying ones.

Re: Why Ireland's housing bubble burst

#123

Post by reducesuffering »

disgruntledphd2 wrote: post #78
pixelatedindex wrote: post #69

Earlier quoted context omitted.

> Demand comes in two forms. Demand for housing and demand for property investments. We should not lose site of the drivers of the second type of demand. Has the US ever lost sight of the second kind? To me (as someone who feels hopeless about home ownership) that seems to be the only demand we care about. There’s barely anything new being built, constant blocking by NIMBYs, and investors buying up so much property w…

> My biggest fear is it’s going to come the moment I do end up buying after saving so much. Honestly, I figured this was gonna happen after Covid, when we finally bought (in a good area, but a small house for far too much money). However, here we are almost three years later, and prices have again increased such that I'm looking at a nominal gain of like 10% (now obviously inflation played a role, and we've put a bun…

It makes sense if you don't expect the median housing price to be determined by the immediate 4x income loan without any savings. If you think housing price should be income * borrow rate, then you're entirely discounting any amount of time saving up, like a 22 year old graduate that rents for 13 years and then after saving up for that time decides to dump 300k into property and take out a loan of 350k (4 * 87.5k/yr).

Also a huge factor, housing price is determined at the margins. If 70% of people already own homes, it doesn't matter what their incomes are. Only the 30% that are competing and trying to outbid each other, which of course is going to skew high income.

I.e in the extreme, you could have all of Ireland own their 300k homes and make 30k euro, but if you suddenly get 1% new population that needs to buy a home, and no one wants to sell, then the new 1% can outbid each other to the tune of offering 800k for homes, and it wouldn't matter that the people making 30k euro couldn't afford 800k homes, they already have them.

Re: Why Ireland's housing bubble burst

#124

Post by robocat »

TimPC wrote: post #25
skeeter2020 wrote: post #11

Earlier quoted context omitted.

I'm interested that you used the word "absurd" - how come? Historically nothing sets up a country better for future success than lots of immigrants - if it's paired with government policy that doesn't discourage growth...

If Canada took in half the number of immigrants it does it would still have one of the largest rates in the world. We are massive outlier for how many we are taking in and all sorts of things aren't keeping up with the demand. The biggest two are home building rates and the health care sector but there are other problems as well.

Canada has 21% immigrants[1] - it is not an outlier compared to AU/NZ. Canada needs 1/2 again as many immigrants to match Australia which has 30% already. I'm in New Zealand with 27% foreign born.

Net migration per 1,000 people (2023) figures[2] are: Australia 6.4, Canada 5.4, New Zealand 4.8

So Australia's immigrant population is also growing 20% faster than Canadas. (albeit emmigrant numbers included so perhaps I'm oversimplifying - I'm not familiar with Oz - but New Zealand has significant outflows).

[1] https://en.m.wikipedia.org/wiki/List_of_sovereign_states_by_...

[2] https://en.m.wikipedia.org/wiki/List_of_sovereign_states_by_...

Re: Why Ireland's housing bubble burst

#125

Post by Dylan16807 »

randomdata wrote: post #120
Dylan16807 wrote: post #116

Earlier quoted context omitted.

> consumed 90 meals per day . > if he has enough money, will buy a house from someone in the first 90 who got there first Which takes longer than waiting for the next day. You're making a distinction that doesn't really exist. > The other 10 are priced out. Those 10 are not market participants, they are simply dreamers. I can only laugh at this. If people give up, then it's not a shortage? You claim my definition mak…

> If people give up, then it's not a shortage? No...? That doesn't make any sense. People also have to give up when there is a shortage. Some people giving up is a constant here. I am sorry to report that the world does not have infinite resources. Economics is a thing only because we have to manage allocation of the limited resources. If you want to take that angle, the mechanism by which they give up is what is sig…

> If they give up to a price-based mechanism, then you have what is considered a normally functioning market. But if price is unable to rise and thereby they have to give up to some other mechanism, then you have what is considered a shortage.

In that case I can take just about any situation that has a "shortage", then reintroduce prices. Did I just solve the shortage? Assume I haven't changed production or consumption at all.

For example, if there's a lottery then simply allow resale after the lottery runs.

> Frankly, I have no idea what your definition is. I stated that if you want to consider dreamers participants in the market then everything that comes with a cost is in shortage.

We can establish a ballpark for what a sensible price is for most things. Don't worry about the exact number right now. If every house costs $1-10, there is not a shortage. If every house costs $1B-10B, there is a shortage. I think over 90% of people you ask would agree with those two statements.

Re: Why Ireland's housing bubble burst

#126

Post by randomdata »

Dylan16807 wrote: post #125
randomdata wrote: post #120

Earlier quoted context omitted.

> If people give up, then it's not a shortage? No...? That doesn't make any sense. People also have to give up when there is a shortage. Some people giving up is a constant here. I am sorry to report that the world does not have infinite resources. Economics is a thing only because we have to manage allocation of the limited resources. If you want to take that angle, the mechanism by which they give up is what is sig…

> If they give up to a price-based mechanism, then you have what is considered a normally functioning market. But if price is unable to rise and thereby they have to give up to some other mechanism, then you have what is considered a shortage. In that case I can take just about any situation that has a "shortage", then reintroduce prices. Did I just solve the shortage? Assume I haven't changed production or consumpti…

> In that case I can take just about any situation that has a "shortage", then reintroduce prices. Did I just solve the shortage?

If there was a situation where price was unable to rise, and you found some way to enable price to start rising again thereby seeing a reversion to a price-based mechanism, yes, you 'solved' the shortage.

> For example, if there's a lottery then simply allow resale after the lottery runs.

Or just allow price to rise in the first place, not requiring a lottery to fall back on at all. If you can wave your magic wand like that so easily, I'm not sure what you've gained in the indirection?

Of course, in reality, if price is unable to rise before the lottery, for whatever reason, it's probably still not able to rise after the lottery. Sure, if it is policy driven you might be able to change the policy, but, again, why not change it right from the get go? You don't need to wait.

> We can establish a ballpark for what a sensible price is for most things.

Okay, let's put that to the test. OpenAI releases true AGI tomorrow. What's the sensible price for it? I've picked my number. Now you pick yours and let's see if we're in the same ballpark. What happens if you aren't in the same ballpark as me? Does that not invalidate your claim?

My intuition is that the only way we can come to agree on a ballpark is if we actually stop and talk about the numbers. Which is all well and good, but just saying "there's a shortage" does not get us there. "Shortage" does not communicate anything here.

> If every house costs $1-10, there is not a shortage. If every house costs $1B-10B, there is a shortage. I think over 90% of people you ask would agree with those two statements.

But what have you communicated with the use of shortage? Let's remove shortage and just say "Every house costs $1-10" and "Every house costs $1B-10B". What information was lost in the removal of "there is/there is not a shortage"?

Are you trying to use shortage as an indication of your emotions? As in, "Every house costs $1B-10B, there is a shortage." being roughly analogous to "Every house costs $1B-10B, I feel that is too expensive."? If that's the case, how can others agree? What grounds would you disagree on? You can't logically dispute how someone else is feeling. That like you saying "My romantic partner is great, I love them." with the retort "I disagree, you actually hate them!". It is nonsensical.

Re: Why Ireland's housing bubble burst

#127

Post by Dylan16807 »

randomdata wrote: post #126
Dylan16807 wrote: post #125

Earlier quoted context omitted.

> If they give up to a price-based mechanism, then you have what is considered a normally functioning market. But if price is unable to rise and thereby they have to give up to some other mechanism, then you have what is considered a shortage. In that case I can take just about any situation that has a "shortage", then reintroduce prices. Did I just solve the shortage? Assume I haven't changed production or consumpti…

> In that case I can take just about any situation that has a "shortage", then reintroduce prices. Did I just solve the shortage? If there was a situation where price was unable to rise, and you found some way to enable price to start rising again thereby seeing a reversion to a price-based mechanism, yes, you 'solved' the shortage. > For example, if there's a lottery then simply allow resale after the lottery runs.…

I have no more detail to give to my argument, so I'll keep this very brief.

> It is nonsensical.

You can have that opinion, but I find the idea that price-based distribution makes shortages stop being shortages, with no change in supply, significantly more nonsensical.

> What information was lost in the removal of "there is/there is not a shortage"?

Shortage is less information but it's also easier to say. For more realistic numbers the word shortage is more than an order of magnitude easier to communicate than raw statistics.

Re: Why Ireland's housing bubble burst

#128

Post by disgruntledphd2 »

reducesuffering wrote: post #123
disgruntledphd2 wrote: post #78

Earlier quoted context omitted.

> My biggest fear is it’s going to come the moment I do end up buying after saving so much. Honestly, I figured this was gonna happen after Covid, when we finally bought (in a good area, but a small house for far too much money). However, here we are almost three years later, and prices have again increased such that I'm looking at a nominal gain of like 10% (now obviously inflation played a role, and we've put a bun…

It makes sense if you don't expect the median housing price to be determined by the immediate 4x income loan without any savings. If you think housing price should be income * borrow rate, then you're entirely discounting any amount of time saving up, like a 22 year old graduate that rents for 13 years and then after saving up for that time decides to dump 300k into property and take out a loan of 350k (4 * 87.5k/yr)…

That doesn't explain the huge parts of Dublin with a 650k median price in a country where a household income of 100k puts you in the top 10%.

That's the part that seems insane to me. Like some proportion are cashing out previous gains but it's hard to believe that this is more than 50% of them.

Re: Why Ireland's housing bubble burst

#129

Post by disgruntledphd2 »

reducesuffering wrote: post #123
disgruntledphd2 wrote: post #78

Earlier quoted context omitted.

> My biggest fear is it’s going to come the moment I do end up buying after saving so much. Honestly, I figured this was gonna happen after Covid, when we finally bought (in a good area, but a small house for far too much money). However, here we are almost three years later, and prices have again increased such that I'm looking at a nominal gain of like 10% (now obviously inflation played a role, and we've put a bun…

It makes sense if you don't expect the median housing price to be determined by the immediate 4x income loan without any savings. If you think housing price should be income * borrow rate, then you're entirely discounting any amount of time saving up, like a 22 year old graduate that rents for 13 years and then after saving up for that time decides to dump 300k into property and take out a loan of 350k (4 * 87.5k/yr)…

And at the margin the median price should be determined by home loan plus 10% deposit.

Re: Why Ireland's housing bubble burst

#130

Post by ta1243 »

TulliusCicero wrote: post #117
tmnvix wrote: post #115

Earlier quoted context omitted.

Thank you for this. It does clearly corroborate that figure of 9%. Still, 230,000 dwellings of 2,125,000 in total is a lot to be be vacant during an accommodation crisis. As I said elsewhere, the number of vacant dwellings is higher than most would suspect.

Often the issue is where exactly those vacant dwellings are. Typically, booming metro areas will have a low vacancy rate, while the vacancy rate will be high in rural areas or declining cities, where economic prospects are more dubious. Demand is local. If someone needs to live in Dublin for their work, it doesn't help them much if there's cheap housing a few hours away.

Quite, indeed in London the pressure group "action on empty homes" say it's 2.2% - and that includes second homes (people with a flat in London and a house elsewhere, airbnbs, etc)

That's a tiny number. Even if that number was zero there would still be a massive shortage. Most claims of "homelessness" ignore overcrowding, they're looking at people living on the street, or at most sofa-surfing, they don't look at overcrowded houses, at 30 year old adults with above-average wages who have to share family homes with half a dozen strangers in HMOs.

https://static1.squarespace.com/static/6553693f7d629a133b6a4...

I don't know about Dublin but I would be surprised if it's not a similar demographic. A lot of cities have a fair amount of airbnbs because they work better for modern travellers than hotels

The biggest places outside the City of London (the square mile in the very middle, it's a special case due to its size) are holiday hotspots like Cornwall, South Devon, the Lake District, where holiday homes, either private or rented out ("airbnbs") make up nearly 10% of the stock.

They also (like action-on-empty-homes) claim airbnbs as "empty", which is a political view. There are about 200k visitors in a given peak summer week to Cornwall [0] and 13k "second homes" [1]. Assuming they are all holiday lets, and lets go for a typical 4 person family, that's 50k visitors. Slash those numbers and that's a hell of a lot of tourists not spending money, and a hell of a lot of jobs not being funded.

On the other hand cornwall could have its total housing stock increased by 5.6% and all the problems would apparently be solved - as there would then be the same number in primary residential use as exist right now.

[0] https://www.bbc.co.uk/news/uk-england-cornwall-58099906

[1] https://static1.squarespace.com/static/6553693f7d629a133b6a4...

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