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Priced out of home ownership

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Re: Priced out of home ownership

#201

Post by bryanlarsen »

lwansbrough wrote: post #184
bryanlarsen wrote: post #176

Earlier quoted context omitted.

Federal would require constitutional change, so it'll never happen. But it's the right idea -- move it up the chain so that it's not a hyper-local issue. IOW, at the state level rather than city/county. This has seen some success in California: https://cayimby.org/legislation/

The Canadian government is currently facing this problem. Provinces have constitutional authority over building and zoning. One way they're trying to get around it (though in my opinion, no party is taking this seriously and all efforts thus far have fallen laughably short of where they need to), is by incentivizing the adoption of federal policy by conditioning federal housing grants on the adoption of new federally…

The BC government has been relatively successful at this. Housing prices in Vancouver used to be ~2X those of Toronto; now Toronto is more expensive than Vancouver.

The Ontario Housing Affordability Task Force released a list of 55 things to do to reduce housing prices. BC has implemented a far larger share of that 55 than Ontario has.

> In my opinion, the federal government should be designing simplified building and zoning guidelines and offering unprecedented grants (on the order of tens of billions) to provinces in a first come first serve manner. Have provinces compete on urgency to receive the most funds, tapering off the offer the longer provinces hold out.

That's basically what they're doing. They can't change zoning without changing the constitution, but they are giving out tens of billions of dollars conditional on appropriate zoning changes. BC has received lots of money that way, Toronto has bypassed the province to get theirs and Alberta has made it illegal for Calgary & Edmonton to access theirs.

Re: Priced out of home ownership

#202

Post by FireBeyond »

cush wrote: post #105
rr808 wrote: post #11

I always assumed when the baby boomers retired there would be a flood of big family houses coming up for sale. I see it in my parents that they're pretty comfortable staying in the family house as long as possible, I'm happy with this. It is made a lot easier by the fact that prices keep going up so staying in a house that is oversized financially is rewarding. I'd like to think it'll all come to and end one day as t…

Unfortunately, similar to the housing crisis , there’s a retirement home crisis and many people can’t afford long term care without selling the home they wanted to leave to their children.

And then (and I'll admit a cynicism here, from having seen the best of the best to the worst of the worst) retirement homes (ironically often owned by Boomers) chronically underpay their employees so many of the facilities I've seen in my time as a paramedic, I wouldn't send my worst enemy to. There is distinctly a segment of that populace who have on one hand, pissed off their children sufficiently that they don't want them living with the family in retirement, and on the other have studiously applied the "fuck you, got mine" mentality throughout their life such that their retirement or nursing home options are little better than "fade away just on the right side of the line of neglect".

Re: Priced out of home ownership

#203

Post by danem »

zenapollo wrote: post #81
jeffbee wrote: post #59

None of the measures mentioned in the article — lower interest rates, lower transaction fees, down payment subsidies — will lower costs. Every one of them will raise prices. You can only fix this with supply: build homes.

There’s another way to fix it. You can regulate financial speculators. In the US 1/4 of all US homes are owned by financial institutions. I doubt it’s very different in Europe unless they are regulated. This situation ensures only the rich can own a home as buyers are competing against hedge funds.

> In the US 1/4 of all US homes are owned by financial institutions.

That is not true unless you consider having a mortgage equivalent to renting from a bank.

What is true is that in some metro-areas like Atlanta, 1/4 of sales (in certain price categories) are to investors.

Re: Priced out of home ownership

#204

Post by Auracle »

lwansbrough wrote: post #171

In my opinion, there can only be one solution to this that will come sooner or later. A great correction following simplified zoning & building legislation. Federal governments across the west need to take control of building and zoning. Planning can remain a city/state/provincial affair, but it must be done under standardized and simplified building and zoning legislation. We are wasting unfathomable economic potent…

I’ll keep shouting this from the rooftops: while it may contribute in some areas, zoning laws are not the primary cause of home prices increasing like they have. For proof, look at any rural (and I mean actual rural) area and how their home prices have also been skyrocketing.

It’s supply and demand, with other things being small factors. We either need to vastly increase supply across the entire country somehow, or cut down on demand. The latter is a hell of a lot easier than the former. For some reason it’s ok to talk about this in the context of Canada and how their mass immigration has increased home prices, but that applies to almost everywhere. Japan literally has homes they’re trying to give away.

Re: Priced out of home ownership

#206

Post by Auracle »

nradov wrote: post #158
User23 wrote: post #136

Earlier quoted context omitted.

The primary input isn’t land, it’s tolerable neighbors. That is of course what “good school district,” “location, location, location,” and similar euphemisms actually mean. If you have a high tolerance for crime and other antisocial behavior there is plenty of extremely affordable housing in major US cities with plenty of amenities like walkability and public transportation.

Or if you venture outside of major cities there is also plenty of affordable housing in unfashionable suburban. Many of those areas also have low crime and decent public schools. Not much public transportation, but plenty of free parking.

Define affordable. My nearest town has a population of 500 or so and my home’s price has at least doubled in the last 10 years.

Re: Priced out of home ownership

#207

Post by ricardobeat »

esel2k wrote: post #149

I am not an economist but if we would treat house ownership something that is beneficial for the whole society (less traffic from commuters, less homeless etc) and remove the speculations/foreign investments around housing? Why not apply the following: - every house not used for primary living place is highly taxed (removing all speculative ownership) - charge foreign investors heavily (australia will do this soon) -…

This is partially implemented in the Netherlands, most new houses are move-in only, a second mortgage requires 40% downpayment. Rules were updated recently to include an extra 300k homes in the rent control scheme. People I know who are landlords are trying to sell.

And yet, supply is so constrained that house prices continue to rise. Either cities need to stop growing, or build a lot more housing.

Re: Priced out of home ownership

#208

Post by fairity »

I don’t get articles like this. It’s arguably a better financial decision to NOT buy a home, and park your downpayment in a broad based index fund. I get that there are arguments for or against, but there doesn’t seem to be a clear financial advantage to home ownership. So, what’s the big fuss about? Just pay rent and carry on? Surely, there are better things to focus on?

Re: Priced out of home ownership

#209

Post by MisterBastahrd »

fairity wrote: post #208

I don’t get articles like this. It’s arguably a better financial decision to NOT buy a home, and park your downpayment in a broad based index fund. I get that there are arguments for or against, but there doesn’t seem to be a clear financial advantage to home ownership. So, what’s the big fuss about? Just pay rent and carry on? Surely, there are better things to focus on?

Every person should be able to have a right to say "This is me. This is where I live. I belong here." It's all fun and games until you've lived in one place for 15 years and your landlord decides to sell the place out from under your feet because a developer wants to build a high rise.

Re: Priced out of home ownership

#210

Post by phoehne »

nomilk wrote: post #112

Given how abundant land is, does it imply that supply shortages are purely man-made? (e.g. policies not allowing large swaths of land to be built on). Otherwise it doesn't make sense that prices are high for a good (housing) whose primary input (land) is in great supply.

First, not all land is the same. The US coasts, for example, have much better income and job availability than sparsely populated cities in the middle of the country. In Europe, the size of the city is somewhat "fixed," depending on geography, transportation, etc. The same is true of some US cities, meaning that land is just more valuable that other land. That's why you see houses that are almost free in some cities, but those towns and cities are not the place where most people want to live.

Second is construction cost. A round number for the US is about 150 USD per square foot. So a 2,000 sq. foot house should be in the neighborhood of $300,000. (That does not include land, just the structure). However, in desirable cities this number is higher because labor costs are higher. In sparsely populated cities, that number is (of course) lower. This varies country to country, and in some space constrained cities, vertical is the only direction that you can build. (As one poster noted below, the $150/sq foot is only for single family. Multi-story buildings are significantly more expensive.)

But probably the biggest problem are artificial barriers to construction. The zoning system in the US, for example, prevents the construction of higher density in some areas. For example, a neighborhood can be zoned at 1 per acre. It's illegal to build a duplex, apartment, or to divide the acre into four and build four houses, etc. The zoning is set by a local board elected by homeowners in that locality. Being near high-density housing often lowers the value of existing homes, including making traffic worse and stressing the school system. (Also, to be fair, a sudden, large influx of new people, before the tax base and services catch up, can stress EMS, hospitals, fire, police, public transportation, sewage, water, electrical grid, etc. as well as just schools and roads).

Finally, there are builders, who would rather sell one large unit instead of lots of cheaper units. Building and selling a 1,000,000 USD home is cheaper and easier to manage than 5 200,000 USD homes. If you can only build one house per acre, or the space is constrained by geography, it doesn't make economic sense to build a 200,000 USD house. Even if space isn't constrained, the incentive is to build luxury, high end units as long as you can sell all your inventory.

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