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Priced out of home ownership

bbc.co.uk

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Re: Priced out of home ownership

#361

Post by WalterBright »

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…

Two more causes:

1. People have mortgages with very low interest rates. If they sell the home, they give up that cheap mortgage for a much higher mortgage interest rate with the next home. So, they stay.

2. The capital gains tax exemption of $500,000 has not risen with inflation. Selling your appreciated home will result in a large tax bill. It makes sense to sit in the home until you die, then it gets a basis boost when transferred to the heirs.

Re: Priced out of home ownership

#362

Post by cpursley »

tcgv wrote: post #266
phoehne wrote: post #188

Earlier quoted context omitted.

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. [1] https://www.portugalhomes.com/golden-visa-portugal

The golden visas were issued in relatively small numbers, I doubt they affect price much vs all the short term rentals like Airbnb combined with explosive popularity of Portugal.

Re: Priced out of home ownership

#363

Post by biophysboy »

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 price of a home in an area is strongly related to the aggregate income divided by the total number of housing units. Even if the numerator is significantly affected by the artificial credit pumping you mention, that does not mean changing the denominator wouldn't help.

Re: Priced out of home ownership

#364

Post by verdverm »

whoknowsidont wrote: post #338
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.

Because the U.S. doesn't actually have a supply problem, despite this often getting repeated. U.S. construction of homes has actually kept up with population growth and moves, by every conceivable metric. What IS happening though is that landlords (private and corporate) "warehouse" units constantly to artificially restrict supply and demand, and they do it in collaboration with each other. Every single city and stat…

What if the people building the houses are incentivized to build large, expensive homes? That means the buyer does not have choices in their preferred price range and must buy above what they actually want

Re: Priced out of home ownership

#365

Post by LouisSayers »

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 this feeling too and recently started making a calculator which I intend to add a comparison for (housecalculator.co.nz)

Of course reality is nuanced - a friend of mine for example is building out essentially his own apartment in his garage and having his sister pay rent for his house.

I'm still not sure how best to add a "compare buying to renting" feature for the calculator, so any ideas are most welcome!

Re: Priced out of home ownership

#366

Post by ivan_gammel »

aegypti wrote: post #325
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.

Iirc, 20% of all bedrooms in UK are spare bedrooms in houses that are too big for their owners. This is indeed underutilization.

Re: Priced out of home ownership

#367

Post by ForHackernews »

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…

> 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?

Yes! Yes they all do! None of them are producing housing at anywhere near the rate required.

Re: Priced out of home ownership

#368

Post by Glyptodon »

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…

I agree higher rates are likely to help with prices, and that low rates drove asset price inflation, and purchases of non-primary residences, as well as rental properties, but I also think there's also an element of nobody being willing to stomach a loss leaving supply constrained. And it seems like maybe that can only be loosed by more supply coming from somewhere, while in the meantime, it means prices only get higher.

One thing that's surprised me is that I'd expected this situation to lead to building being relatively cheap compared to buying. But land + labor + materials price increases seem to have left building less competitive in most areas meaning new supply can't actually undercut the market much, if at all. Or seemingly won't. It really feels like there's nothing that can give at the moment, like it's some kind of doom loop.

Re: Priced out of home ownership

#369

Post by madmask »

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.

Independent house is the way

Re: Priced out of home ownership

#370

Post by ajsnigrutin »

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…

Yes, it's lack of building.

Half of my city and many other cities around my country were built during the communist 70s and 80s... and then we stopped building and maybe built 5, 6 apartment buildings in the last 30 years.

Then urbanization came, centralization, everyone wants to live in a city.. but we're not building more housing.

We can look around europe.. how many apartment projects were done in the 70s and 80s, and how many are being built now.... we built whole new neighbourhoods back then, and now we have 4 people sharing a two bedroom apartment.

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