Stop subsidizing demand at the national level. Stop restricting supply at the local level.
Stop subsidizing non-owner occupied demand.
Priced out of home ownership
261–270 of 1001 posts
Re: Priced out of home ownership
#262The US government printed a bazillion dollars during covid, continues to spend wildly, and engages in practices like transfer of college debt from debtors to tax payers. It's a complete mystery why inflation has run amuck.
I think you mean business loans like PPP, not student loans.
Didn't PPP go to wages? Unless it was literal outright felony fraud. My employer received a PPP loan and it had to go to non-management employee pay.
Re: Priced out of home ownership
#263The US government printed a bazillion dollars during covid, continues to spend wildly, and engages in practices like transfer of college debt from debtors to tax payers. It's a complete mystery why inflation has run amuck.
> It's a complete mystery why inflation has run amuck.
The CPI inflation rate is 3.4%, and it's been under 4% for a year.
House price inflation is at almost 6%, and it's been above 4% for more than 10 years. The lowest house price inflation rate during Trump's presidency was 4.4%. Excluding the financial crisis, you have to go back to the mid-90s to find house price inflation under 3%. Pandemic-era fiscal policy and college loan debt cancellation is not helpful as an explanation for the explosion of house prices.
Re: Priced out of home ownership
#264None 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.
Your causation is reversed.
Financial speculation happens because people believe (reasonably) that the price of a home will increase. Why do they hold this belief? Because the demand has increased while the supply is kept artificially constant.
That's what's so frustrating about all of this -- it's a complete own goal. If we all collectively do nothing at all, developers will move in to capture the consumer surplus. It will be profitable to build, not buy and hold.
Re: Priced out of home ownership
#265I 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’ve heard this argument a lot on HN, and yes it can be argued, there are valid points, but personally I think it ignores some realities. First, the article is pointing out that housing prices are high enough that a growing number of people can’t afford the down payment. Second, for people who barely have the down payment, it takes a lot of discipline (and faith) to park all your money in the stock market and not spend it. It’s one thing when you invest disposable income, and another entirely to gamble your life savings. Plus index funds aren’t always outperforming real-estate, so you can’t base the argument on only the last 5 years. Usually this argument has come in the form of suggesting that the best stock market returns out there exceed real estate inflation, and so you have to be a savvy investor and stay on top of your stocks day-to-day, which is a very tall order for the bottom half of the population.
Okay on top of all that, a down payment is 20% of the cost of a house. Buying the house is perhaps a little more like a leveraged loan. If the stock market and real-estate were to both inflate by the same amount, your investment in a house gets you 5x the return that your down payment investment makes. In the mean time, all the money you pay in rent goes down the drain, whereas all the money you pay into the house above the down payment comes back to you when you sell the house. From my point of view, a house seems like a far better investment, when you factor in the rent you lose. And historically home ownership has been the single most important wealth-building tool for the average US citizen.
It is legitimately concerning that the median house price is so high, and the trend is continuing upwards. Some of the fuss is concern over the future potential of a crashing economy, and yes that certainly will give us bigger things to worry about.
Re: Priced out of home ownership
#266I live in Portugal and here the situation is outright ridiculous. 1. There are a ridiculous amount of abandoned properties, when I walk the streets of major cities, sometimes more than half of the buildings even in expensive areas are boarded-up. 2. Meanwhile I am afraid of being homeless soon, I lost my job recently, and the unemployment benefit I can receive is literally half of my rent. Thing is, there is no "wors…
I'm not sure if it's the case in your location, but sometimes foreign buyers come in and buy properties they don't expect to inhabit (unless something goes really bad in their country). Europe and the US have strong rule of law systems that prevent the state from just taking property. (The government charging you with a bogus criminal charge to justify taking their property in in their home country). It's also an ass…
Portugal had a golden visa program that granted citzenship if you bought real state of at least 500k EUR. That drove home prices up signficantly in Lisbon, specailly units in that price range.
Under new law, the Portuguese Golden Visa no longer provides Residency status through Real Estate investments.
Re: Priced out of home ownership
#267I 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…
How does this logic work when the next generation/incoming demographic is even bigger? Boomers aren't an isolated bloc of people followed by 20-year-olds. It's a continuous expanding number of X year olds every year.
For specific USA numbers:
There are 18.7 million 65-69 year olds.
There are 21.1 million 60-64 year olds.
There are 22.3 million 55-59 year olds.
Etc... You can't have one demographic retire/die off and everything is cheap again -- because there is always another demographic moving right into their place all the time.
Re: Priced out of home ownership
#268Earlier quoted context omitted.
Now imagine all this, but 2008 was barely a blip and not a low for home values - that's Canada.
Every time I hear someone predict the next housing crash I always ask them if they have looked at Canada and Australia. Seems to get more and more absurd but it keeps on trucking along.
I keep wondering who the hell buys the housing on my city.
The time for selling is on the 2 digit months, but the price of any small apartment is out of the reach of 95% of the people that live here if they save for their entire life. Anything that isn't small is out of reach of more than 99%.
Re: Priced out of home ownership
#2692008 was low of the low for home values. In my view a few things have happened since: 1.hyperconsolidation in lenders 2. Real estate orgs have worked together to eliminate downward price pressures. 3. NIMBYs and generally “home ownership associations “ have created so many barriers to building & reaped the profits in their own home values. Some good news is that most populations are slowing or declining on the globe,…
Now imagine all this, but 2008 was barely a blip and not a low for home values - that's Canada.
Same in New Zealand. The parallels between New Zealand and Canada in housing are truly tragic.
Re: Priced out of home ownership
#270Stop subsidizing demand at the national level. Stop restricting supply at the local level.
That's not the problem at all. Stop allowing people to buy multiple homes. Stop allowing landlords to "collaborate" on prices.
How come prices go down in the markets where supply increases? Are landlords being extra generous there to fool us?