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Priced out of home ownership

bbc.co.uk

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Re: Priced out of home ownership

#241

Post by tsss »

mym1990 wrote: post #212
postalrat wrote: post #194

Earlier quoted context omitted.

Land is cheap but building a house is expensive. If you want more supply then you are going to need to make building more economical.

Land is definitely not cheap in places people actually want to live, and land is the thing that is appreciating over time, not the structure.

The building does appreciate sometimes, at least here in Germany because the increasing absurdity of bureaucracy and regulations make the same class of house more and more expensive to build. At the same time, "lower classes" of houses become outright illegal to erect, leaving only the luxury segment for new buildings. Old buildings have grandfather privilege and thus become more expensive than an equivalent new build would be, simply because you aren't allowed to build new.

Re: Priced out of home ownership

#242

Post by lkdfjlkdfjlg »

rahimnathwani wrote: post #195
JonChesterfield wrote: post #15

The UK made renting property a lot less lucrative a few years ago. Something about the tax position of letting mortgaged property. That meant landlords sold their houses - which I believe was broadly the point - and thus there are fewer places to rent and the cost of renting has increased to the new point of stability. I think this probably has decreased house prices to some extent, but people are really insanely rel…

Something about the tax position of letting mortgaged property. EDIT: I had misremembered. Landlords can still get a tax deduction for mortgage interest, but only at the 20% rate, not at their marginal tax rate. For most landlords with mortgages, this probably halves the tax credit. In the UK, if a private landlord receives £1000 in rent, and pays £800 in mortgage interest, they pay tax on the whole £1000, not just o…

> Why should a landlord be unable to deduct business expenses from revenue before calculating taxable profit, when all other businesses can?

I think you nailed it. This is effectively the government saying "renting is not a business".

Think about it. The ability to "deduct expenses" is one of the characteristics of businesses. Individuals also can't deduct rent, food etc from their taxes.

Re: Priced out of home ownership

#243

Post by deergomoo »

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?

No-one can kick you out of your own home because they want to rent to someone they can charge more. No-one can tell you you can’t change the wallpaper in your own home, or remodel the bathroom, or get a dog.

Not everything is a purely financial decision. A home is primarily a place to live, not an investment opportunity.

Re: Priced out of home ownership

#244

Post by immibis »

yourusername wrote: post #6
vouaobrasil wrote: post #2

Where possible, states should build more tiny house communities, or have land where putting up a tiny house is legal and pain-free. There should also be a law prohibiting a person from owning more than one of them, except for temporary periods of moving out of one and into another. (The same should hold for regular houses, too.) Effectively, land is a different sort of commodity than most others: it is truly finite,…

>Where possible, states should build more tiny house communities, or have land where putting up a tiny house is legal and pain-free. But let's just call them what they are: Trailer parks. I just don't see how trailer parks are going to solve the problem. You may have cheap land but if you put 500 trailers on a plot you're still going to need sewage hookup, power and water for 500 homes.

Then do that. That isn't nearly the majority of the cost of a home.

Re: Priced out of home ownership

#245

Post by Carrok »

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?

I have rented for the past 20 years, the vast majority of my adult life. We are buying soon.

Could I make more in an index fund? Sure, probably. But I can’t make a rental into what I want it to be, you are often not even allowed to paint the walls.

I can’t plant a garden in an index fund.

Re: Priced out of home ownership

#246

Post by [deleted] »

chomp wrote: post #56
bdcravens wrote: post #8

I bought in 2022, and while it was new construction, it's a pretty mid-range house. No premium finishes, in a growing but small city northwest of Houston. If you told me 10 years ago how much I paid for it, I'd ask what the name of my butler is.

I bought in the same exact area 10 years ago, this house was over 200k cheaper than it is now. There’s no way I’d be able to afford modern prices.

[deleted]

Re: Priced out of home ownership

#247

Post by onion2k »

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?

That definitely wasn't the case in the 1990s through to about 2020. House prices doubled about every 10 years in some areas while interest rates were about 2% on average. Housing has been by far the best small investment open to most people.

The problem now is that property buying at scale for the long term is a model private funds are trying, interest rates are going up, and housing supply at the lower end of the scale is constricted because there's no profit building those houses. All of which means people who want to buy a house rather than pay a landlord are basically screwed.

Re: Priced out of home ownership

#248

Post by IAmGraydon »

jb1991 wrote: post #218
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?

It's not as simple as that. Home ownership can be a lucrative investment long-term, it depends on many factors. When property values appreciate a lot, as they have been recently, home owners have done very well.

The recent rate of appreciation is not typical. Homes generally appreciate at 3-4% per year. Subtract from that taxes, insurance and upkeep. They’re a terrible investment unless you own rental property, at which point your tenants are paying down the loan.

Re: Priced out of home ownership

#249

Post by ch4s3 »

ayakang31415 wrote: post #238

I am sure people are priced out of "desirable" places. I don't think this can be fixed by oversupplying homes in specific areas. You need to incentivize people to move into low dense areas.

Why would we want a public policy that spreads people out? There are great economies of scale in dense urban areas, not to mention climate and other environmental factors.

Re: Priced out of home ownership

#250

Post by imperfect_light »

vouaobrasil wrote: post #2

Where possible, states should build more tiny house communities, or have land where putting up a tiny house is legal and pain-free. There should also be a law prohibiting a person from owning more than one of them, except for temporary periods of moving out of one and into another. (The same should hold for regular houses, too.) Effectively, land is a different sort of commodity than most others: it is truly finite,…

We used to have housing of last resort, places like SROs that were unpleasant but cheap (and to be fair, they were often firetraps). But then we decided it was inhumane so we banned or greatly restricted them, and surprise, the people that would have been in an SRO now live in cars or tents, definitely not an improvement.
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