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Priced out of home ownership

bbc.co.uk

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Re: Priced out of home ownership

#271

Post by IAmGraydon »

MisterBastahrd wrote: post #209
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.

>Every person should be able to have a right to say "This is me. This is where I live. I belong here."

Why do you think every person should have an “right” to own property? It’s a nice utopian idea, but that’s not how a capitalist economy works.

Re: Priced out of home ownership

#272

Post by nradov »

Auracle wrote: post #206
nradov wrote: post #158

Earlier quoted context omitted.

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.

Absolute prices are irrelevant. Affordability is reflected in home ownership rates. In some states such as Alabama, Maine, Minnesota, Vermont, South Carolina, etc. the rates are above 70%. Regular people seem to be finding it affordable.

https://www.propertyshark.com/info/us-homeownership-rates-by...

Re: Priced out of home ownership

#273

Post by patall »

Are mortage rates that high everywhere in the US? 7%, or 6.625% sound ridiculous to me in norther europe. I pay 4.54% now with roling 3 month-fixed rates, but its going down now, and I could get it for 3.55% if I fixed it for 5 years. 30 years fixed is pretty much impossible here in Sweden. But you get ~30% of your interest back as tax deduction, so effectively I am borrowing at ~3% (in SEK). Which, again, is cheaper than 4.5% in the US in 2019!!!, a time when my parents could borrow 20 years fixed at ~2.2% (in the euro zone).

Re: Priced out of home ownership

#274

Post by tmnvix »

People intuitively jump to the conclusion that the problem is caused by a lack of building. While more building would help, a lack of it isn't the main cause of this problem.

Ask yourself, do Canada, Australia, New Zealand, the US, Britain, Ireland, etc, all have the same inability to build or is there maybe some other common cause?

In my view this is symptomatic of a more fundamental issue - global asset price inflation driven by a broken financial system (i.e. a system being artificially pumped up with cheap credit). Housing is just where the rubber hits the road and regular lives are directly effected. Just look at the tight correlation between the increase in the money supply and property prices.

For those who insist that the number of properties is inadequate, take a look at the numbers for each of the countries I mentioned in the first chart here: https://www.oecd.org/els/family/HM1-1-Housing-stock-and-cons... (Total number of dwellings per thousand inhabitants, 2022 and 2011).

This is a problem of underutilisation in my view. Too many properties are being used as investments and not as a primary residence.

Cheap credit causes an increase in demand. This is not demand for homes but additional 'artificial' demand for properties as investments. Think short term rentals, second homes, land banked properties, etc. By definition, only investment properties can be underutilised - owner occupied homes are occupied! So in an environment that encourages property investment you will see more underutilisation.

What will cause prices to fall is higher interest rates. This is what has been happening in NZ.

Re: Priced out of home ownership

#275

Post by Tiktaalik »

EduardoBautista wrote: post #123

Why doesn't the government build and sell housing at a small profit? Here in Dubai, the largest housing construction companies are or were government owned. It's one of the ways the government can have zero income tax despite oil being less than 1% of its economy. My only thought is that it's political, and some voters don't want their houses to lose value.

Right wing activists and government have pushed the idea that government is hopeless, can't do anything and shouldn't try, and aggressively tried to make government as limited and as small as possible. This is often labelled "starve the beast" strategy.

They may well have a point, that government should only do things that only government can do, and that by declining to be involved they're leaving space for private businesses to operate.

But yea that's how we got here.

At this point any attempt for a government to be more intentional and interventionist would result in severe push back from the right.

Some governments are trying. In British Columbia, the government has changed laws to allow the arms length public transit agency to be able to buy and develop land around its transit stations.

Re: Priced out of home ownership

#276

Post by throwaway22032 »

In the UK we basically just seem to have some variant of regulatory capture.

The man on the street wants less immigration and more housebuilding so that they can start a family.

The political class seem to want to just import a ton of low skilled foreigners because they'll take lower living standards.

It's ass backwards. The solutions are obvious.

Re: Priced out of home ownership

#277

Post by MisterBastahrd »

IAmGraydon wrote: post #271
MisterBastahrd wrote: post #209

Earlier quoted context omitted.

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.

>Every person should be able to have a right to say "This is me. This is where I live. I belong here." Why do you think every person should have an “right” to own property? It’s a nice utopian idea, but that’s not how a capitalist economy works.

Why do you think we need capitalist economies? It's almost as if you've just decided that the other thing must necessarily exist.

Re: Priced out of home ownership

#278

Post by teaearlgraycold »

khuey wrote: post #175
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) -…

None of that addresses the fundamental problem which is that there's just not enough housing. Greater Dallas builds more housing than the entire state of California.[1] Until that changes California's housing costs cannot be fixed. [1] https://x.com/JosephPolitano/status/1794495929266983191

Renters in CA should be ready to tell owners resistant to new development to go fuck themselves. Oh, you put all of your eggs in one basket (real estate)? Seems like a bad decision.

Re: Priced out of home ownership

#280

Post by JumpCrisscross »

deergomoo wrote: post #243
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.

> No-one can kick you out of your own home because they want to rent to someone they can charge more

Property tax isn’t voluntary and as exogenous as a landlord. (Also eminent domain, to say nothing of most peoples’ mortgages.)

> Not everything is a purely financial decision

Making the largest leveraged purchase of your life for an emotional comfort object is irrational. That doesn’t make it wrong. But it ceases to be a policy concern. (I might feel secure having a Fabergé egg in my possession, that doesn’t mean the public needs to give a shit about it.)

The reason home ownership is a public priority is various and I agree with it as a goal. But it’s a bad financial decision for many people, and there is legitimacy to questioning if we can duplicate the forced-saving and civic engagement benefits more simply.

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