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Priced out of home ownership

bbc.co.uk

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Re: Priced out of home ownership

#381

Post by m4rc1e »

cedws wrote: post #191
DataDaoDe wrote: post #7

For those interested, Gary Stevenson has an interesting take on what is causing this, even though his view is focused on the UK market: https://www.youtube.com/watch?v=kNUNR2NZvFM

Something about Gary Stevenson doesn't feel right. Although what he says generally sounds good, all of his videos contain the exact same rhetoric about blaming problems on wealthy people. And yes, he says he's an inequality economist so it makes sense that he would say this, so why not show the numbers and data to back up his claims? He talks for 10-20 mins seemingly pulling his theories out of thin air. In that very…

His recent book went #1 on the Times best seller list so I guess his videos have been a brilliant form of marketing.

Re: Priced out of home ownership

#382

Post by itake »

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…

While I agree building housing is a symptom, and not the core problem. But I'm skeptical that increasing building or density would actually lower housing costs. If that were true, high dense cities like Beijing, Tokyo, Singapore, or Hong Kong would have much lower cost housing.

Housing more people in a concentrated area creates more demand for services, which creates more demand for housing which jacks up prices. Packing 1,000 people into an apartment build creates extremely high demand for plumbing, house cleaning etc, services, which jack up housing prices. But if cities were low-density with commerce centers decenteralized across many neighbhorhoods or towns, you don't create location demand hotspots (e.g. cities) that jack up prices.

Property taxes and interest rates are a forcing function to keep unoccupied properties in check, as long as the appreciation doesn't dramatically exceed the risks of being a LL. For Tier 1-3 markets in the USA, you can't cash flow properties as rent is drastically lags property ownership costs.

Re: Priced out of home ownership

#383

Post by Wytwwww »

dan-robertson wrote: post #351
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…

> do Canada, Australia, New Zealand, the US, Britain, Ireland, etc, all have the same inability to build …? Sort of? See eg https://www.ft.com/content/dca3f034-bfe8-4f21-bcdc-2b274053f... for some graphs that show Europe vs anglophone countries in an obvious way. Obviously there are lots of differences between the countries, eg the specifics of their planning systems and economies. The US is different because of the…

> for some graphs that show Europe vs anglophone countries in an obvious way

Housing is still extremely expensive in most major European cities relative to income. e.g. Milan, Lisbon, London, Rome, Munich are significantly more expensive than San Francisco or San Jose (e.g. Milan is more than 2x more expansive) if you're earning the median income.

It's not like most people in some European countries chose to live in rented cramped apartments they simple have no choice because they can't afford anything else.

> you see something like 20% more dwellings per person in developed EU countries vs

It's not clear how much of that is because of lower (or negative) population growth. e.g. Italy has one of the highest dwellings per person ratios and there are towns/villages which are basically giving away houses for free Milan is still relatively the most(?) expensive city in Europe and housing in other major cities is still less affordable than pretty much anywhere in the US.

Re: Priced out of home ownership

#384

Post by mindslight »

oooyay wrote: post #164
speeder wrote: post #104

I 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 live on a sleepy street that's half dense housing and half single family homes. Density will likely take over more than half of the street some day because the city has been relegating more dense housing to the working class areas of the city, which is where I happen to live. [1] Of those single family homes there is one that was owner-occupied for a year when we moved in. Since, it's been locked up and has had no…

> how someone can float a mortgage, much less an investment mortgage, without a renter.

They probably have an owner-occupied residential mortgage that the bank (/note purchaser) hasn't called them on. Declaring that you're residing in one unit (either falsely or temporarily) seems to be a pretty popular technique for buying rental real estate. If the mortgage was taken out during the past two decades of ZIRP, then the rate is still fixed at something very low and most of that monthly payment they're "floating" is effectively just going towards the principle as a mandatory savings account.

Re: Priced out of home ownership

#385

Post by tmnvix »

WalterBright wrote: post #361
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…

With regard to (1), I would have to agree, though I think this is only the case in the US?

For (2), absolutely. Tax advantages play their part (adding to investment demand relative to other investment options). Is it not also the case that interest payments on a residential mortgage are tax deductible in the US?

Re: Priced out of home ownership

#386

Post by killjoywashere »

neilwilson wrote: post #336
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 issue is always lack of building. Higher interest rates just mask the problem and hand more money to rich people for no effort. The problem is that the private housing production system responds to increased credit availability only at the margins and does not over produce. That’s largely because houses are still hand built and not really substitutable like a vehicle. You don’t generally have a choice of two hous…

> The fix is public policy producing housing in order to force a situation of excess supply.

So... we should have paid builders to build more houses during the pandemic?

Re: Priced out of home ownership

#387

Post by chiefalchemist »

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…

> 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).

Spot on. You're not alone. For a more thorough and clinical review of how we're f'ed and why see Lyn Alden's "Broken Money".

To your point, ppl are fond to talk about the economy. That's a distraction. It's a false god. Fact: the economic system and the sociopolitical system both side on a foundation. That foundation is the financial system. Full stop.

https://www.lynalden.com/broken-money/

Re: Priced out of home ownership

#388

Post by adolph »

Plasmoid wrote: post #358
jayski wrote: post #339

Earlier quoted context omitted.

so could this be resolved by having a high tax (~50%) on second/rental/investment homes?

So... where would renters live?

Rent controlled public housing. These could be mass produced and stacked like legos so that rents would be less than 1/3 of UBI. With the addition of municipal broadband there would be plentiful jobs for teleworkers in virtual call centers to provide a back end for no-checkout stores and providing teaching assistance to students using MOOCs.

Re: Priced out of home ownership

#389

Post by toasterlovin »

ivan_gammel wrote: post #366
aegypti wrote: post #325

Earlier quoted context omitted.

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.

Just to conceptualize this, it's like every 5 bedroom house having 1 unused bedroom, perhaps being used as an office. Of course, most houses don't have 5 bedrooms, so in reality this is an extra bedroom for every 2 houses. Again, possibly being well used for another purpose. That doesn't seem like a lot of underutilization to me.

Re: Priced out of home ownership

#390

Post by madmask »

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.

Exactly, move out of the city where conditions are better. With remote work or a couple of commutes a week should be feasible for many.
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