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Priced out of home ownership

bbc.co.uk

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Re: Priced out of home ownership

#321

Post by patall »

sneed_chucker wrote: post #287
patall wrote: post #273

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…

The majority of mortgages in the US are fixed rate with a 30 year term. Mortgages originating now will have a rate in the 7% ballpark. In 2021 you could get mortgages with a 2.5% fixed rate. However, it's common for people to refinance down to a lower rate when they come available, so lots of American homeowners have rates in the 2-3% range.

Makes sense, thank you! Actually that would go in line with my suspicion that 'the market' predicts/trends towards a 2 USD = 1 EUR rate within one or two decades.

Re: Priced out of home ownership

#322

Post by shuckles »

screye wrote: post #304
whoknowsidont wrote: post #196

Earlier quoted context omitted.

That's not the problem at all. Stop allowing people to buy multiple homes. Stop allowing landlords to "collaborate" on prices.

Both are band aids for the real problem. Housing can't both be an investment and a basic need. You need to pick one or find an opinionated middle ground. If housing is an investment, then remove all protections and open up the supply. No height regulations, no minum parking regulations, no mandatory HOAs. No moratoriams or legal protections when loans default. If housing is a need, then regulate it like a limited res…

> Housing can't both be an investment and a basic need.

Yes it can, and it was for large chunks of the 20th century. Imputed rent can have high yields and therefore imply good "investment" income for households with long term stable housing demand.

Re: Priced out of home ownership

#323

Post by mhb »

ryandrake wrote: post #214
woodpanel wrote: post #190

Earlier quoted context omitted.

I think the answer to your perplexity lies somewhere buried here: > The couple that own it own several properties across my city Without knowing which city you’re talking about I can assure you this is rather common. The moment a property becomes just one out of many (assets) in your portfolio your necessity to let becomes a mere annoyance. Many of the housing market imperfections could be at play here, but it certai…

>> The couple that own it own several properties across my city There always seems to be this common thread running through these discussions, but few want to address it. It's just build build build, moar moar moar. The problem isn't that there aren't enough homes. The problem is that so many homes are owned by so few people/entities and are often vacant. We shouldn't allow people (often foreign investors or private…

Increasing the supply by building will make the value of their investment go down and encourage them to rent or sell to someone who will.

Re: Priced out of home ownership

#324

Post by tmnvix »

jachee wrote: post #309
tmnvix wrote: post #274

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 infla…

> This is a problem of underutilisation in my view. Too many properties are being used as investments and not as a primary residence. I've believed for a long time that heavily taxing income from second+ properties, similar to capital gains, would help reduce rent-seeker hoarding, to help free up and reduce the cost of properties for primary-residence owners.

Yes, any government that was serious about addressing this issue would take measures to decrease the incentives for property investment. Instead in most of the countries I mentioned property investment enjoys benefits that other forms of investment don't (tax, leverage, etc).

Personally, I think LVT would be the best approach.

Re: Priced out of home ownership

#325

Post by aegypti »

tmnvix wrote: post #274

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 infla…

The OECD link you’ve provided shows the complete opposite of your point.

The UK, Ireland, Canada, and New Zealand are at the bottom of % vacant dwellings indicating the opposite of underutilization.

Re: Priced out of home ownership

#326

Post by imperfect_light »

tmnvix wrote: post #316
imperfect_light wrote: post #292

First of all, agreed that housing prices are insane, even two-income households struggle to buy in my city. But taking a more long-term view, in the US the owner-occupied housing rate about 65%, which has not changed a ton in the last 50-60 years (high was 69% in 2005 and low was 63% in 1965). Granted the market has changed a lot, we have much bigger houses, and more two-income families to pay for those more expensiv…

Worth keeping in mind that the typical measure of the home ownership rate is really a measure of the proportion of people living in a home with the owner. So a 25 year old living with parents counts towards and not against this. Likewise anyone else sharing the house (boarders, etc). I suspect that the number of people in this situation has increased in the past couple of decades due to housing affordability.

The denominator in this graph is houses, not people, so adult children living/not living at home would have no impact.

Re: Priced out of home ownership

#327

Post by JumpCrisscross »

intended wrote: post #305
JumpCrisscross wrote: post #280

Earlier quoted context omitted.

> 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 b…

You are mixing up a few things somewhere. Wants are infinite. Home ownership is effectively enshrined as a value in most economies. The emotion is part of society’s design. Conforming to this incentive or belief is not unusually irrational,

> Conforming to this incentive or belief is not unusually irrational

Agree. But if that feeling of security is all it’s about, it’s still irrational. Even if it’s conditioned and thus common.

If you’re buying a home to feel good about yourself, you’re making a financially ruinous decision.

Re: Priced out of home ownership

#328

Post by shuckles »

beej71 wrote: post #319
csallen wrote: post #283

Earlier quoted context omitted.

How is restricting supply not a problem? The fewer houses there are to buy, the higher prices will get, because there are more people competing for less.

In my state, they're building new supply, the population has decreased, and housing prices have increased.

These aren't incompatible. Household sizes are falling and number of homes is an input to population, so you can have residents moving out on net while prices increase due to the remaining residents being more wealthy. California is an entire state of ~40 million people where this happens: low and middle income families move out; high income families move in.

Re: Priced out of home ownership

#329

Post by gwbrooks »

baobabKoodaa wrote: post #297
Tiktaalik wrote: post #257

Earlier quoted context omitted.

Even aside from the many places where there has been a clear financial advantage to home ownership, a core value that drives desire of home ownership is stability of tenure. The control over ones destiny and the nigh impossibility that one could be forced to move has strong value.

That "control" is mostly a fantasy. I own an appartment and when I found mold damage I wasn't able to just fix it, I had to take the housing association to court and fought with them for 2 years. It's now fixed and I'm trying to sell the appartment and nobody wants to buy it. Then I read articles like this and it just makes me laugh at the absurdity of it.

In the U.S., only about 30% of homeowners are subject to housing associations.

I get how that seems odd if you live in a big city, a multifamily building, etc. -- associations and their problems are ubiquitous there. But it's not the experience of most American homeowners.

Re: Priced out of home ownership

#330

Post by davidw »

beej71 wrote: post #319
csallen wrote: post #283

Earlier quoted context omitted.

How is restricting supply not a problem? The fewer houses there are to buy, the higher prices will get, because there are more people competing for less.

In my state, they're building new supply, the population has decreased, and housing prices have increased.

But household formation has increased, by a lot:

https://oregoneconomicanalysis.com/2023/10/26/household-form...

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