Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Priced out of home ownership

bbc.co.uk

Post reply on HN
Print view View original

421–430 of 1001 posts

Re: Priced out of home ownership

#421

Post by ivan_gammel »

toasterlovin wrote: post #389
ivan_gammel wrote: post #366

Earlier quoted context omitted.

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.

Rooms used for another purpose are not called bedrooms. See yourself: https://www.ons.gov.uk/peoplepopulationandcommunity/housing/...

Re: Priced out of home ownership

#422

Post by tmnvix »

rcpt wrote: post #401
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…

Higher rates don't do anything because incumbent owners simply pull houses off the market to wait it out. You need to increase carrying costs. Land value tax is the best way but it's about as far as you can get from what's implemented anywhere

I have a feeling that those hoping to wait it out in the hopes of a return to low rates might be caught out this time around.

The past few decades (coinciding with the property price boom) have been all about ever decreasing interest rates. What is happening now looks a lot like a paradigm shift. I wouldn't bet on rates falling substantially anytime soon.

Re: Priced out of home ownership

#423

Post by WalterBright »

tmnvix wrote: post #385
WalterBright wrote: post #361

Earlier quoted context omitted.

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?

Taxes cause all kinds of distortions and inefficiencies as people adapt their behavior to them.

Re: Priced out of home ownership

#424

Post by carlosjobim »

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.

> nobody wants to buy it.

Of course there are tons of people who want to buy it, but not for the price you are demanding. You are unrealistic about price.

Re: Priced out of home ownership

#425

Post by Arainach »

johngladtj wrote: post #416
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? Do they all have zoning, urban planning requirements, and restrictions on what landowners can do with their property? Yes? This isn't a complicated issue, this is 100% a self inflicted "problem" that can be solved with the stroke of a pen. Pro-tip: abolish al…

That's not a winning formula at all. When my neighbor's DIY grow farm in a shed burns down, the fire spreads and affects me. When my neighbor decides to open a diesel engine repair business, the noise and fumes affect me. Most people don't want that.

Re: Priced out of home ownership

#426

Post by twojacobtwo »

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?

Private investors aren't the only way to have rentable properties.

And with not for profit housing, rent is much cheaper and gives a much greater opportunity to eventually no longer need to rent.

Re: Priced out of home ownership

#427

Post by ubj »

> The growing outcry has raised pressure on the US central bank to cut interest rates to bring relief, a move Federal Reserve chairman Jerome Powell has said is likely at some point.

I don't think the solution is as simple as just "cutting rates". Low rates lead to incredibly fierce bidding wars that can drive up the price by tens of thousands of dollars. An acquaintance of mine and his wife bid $50,000 over the asking price on a house in the Boston area a few years ago. They were outbid by an additional $60,000 (total of $110,000 over the asking price). Another acquaintance narrowly defeated 30+ other bidders (!) to get his house.

My wife and I bought a house last year during a time when rates were _highest_. Ironically, I believe this was actually a fairly great time to buy. Competition from other buyers was low, and sellers were more willing to negotiate because they didn't know if they would be able to sell anytime soon. And yes, we now have a higher interest rate, but that can be refinanced down the road.

It's a complex situation. I do hope for lower interest rates, but I don't think that alone is going to solve the issue.

Re: Priced out of home ownership

#428

Post by csallen »

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…

I copy-pasted this comment to my friend, who's the chief economist at a major real estate company you've heard of. Here's their response, verbatim:

> "Bullshit. It's not population that matters it's household formation. Millennials are the biggest generation and they are at the age now where they are forming their own households and there isn't any housing for them near jobs. Vacancies are all in dying rust belt towns no one wants to live in. California absolutely does not have a vacancy problem. That's just a lie."

This aligns with my (admittedly less-informed) knowledge as well.

Your assertion that "every city" has a vacancy problem is particularly mystifying to me. I live in Seattle, and there does not seem to be a residential vacancy problem of any kind. Some quick Googling shows "a homeowner vacancy rate of 1.0% and a rental vacancy rate of 2.5%." That does not sound like a vacancy problem to me. Quite the opposite. Very, very, very few homes are available for sale, even as the city's population explodes.

I also did a quick and unbiased Google search of "population growth vs housing supply." Here's what came up immediately: "In 2023, the U.S. saw 1.67 million household formations, resulting in 17.2 million household formations between 2012 and 2023. In this time period, 14.7 million housing units were started, and 13.4 million were completed." So again, household formation is outpacing housing supply, which results in more competition and thus higher prices.

Both your comment and the links you included (which I perused) seem less like they're concerned with fixing housing affordability, and more like they have an axe to grind against landlords and the wealthy in general.

Re: Priced out of home ownership

#429

Post by Redoubts »

FactKnower69 wrote: post #310
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…

1000%. I will never get tired of teaching people (it's news to every single one of them!) that at any given time, there are more than 20 empty housing units in the United States for every single homeless person on the street ( https://www.self.inc/info/empty-homes/ ). There is not , nor has there ever been , anything resembling a "housing shortage". We live in a post-scarcity world as far as housing is concerned, and…

> I will never get tired of teaching people (it's news to every single one of them!) that at any given time, there are more than 20 empty housing units in the United States for every single homeless person on the street

Are you suggesting we deport homeless people from cities with low vacancy rates, to cities with high vacancy rates?

> There is absolutely no barrier to housing every single human being beyond greed.

I suspect your answer to the question above will reveal a barrier.

Re: Priced out of home ownership

#430

Post by tmnvix »

robertlagrant wrote: post #372

The problem is lack of supply vs demand. In 2022,England and Wales: - built 254000 homes[0] - had 745,000 people immigrate (net)[1] - had 600000 people turn 21[2] - had 577160 people die[3] If you gain a load of people, far more than you increased dwellings for, prices will go up and dwelling size will go down. It's not particularly complicated. [0] https://www.savills.co.uk/research_articles/229130/357082-0 [1] http…

> The problem is lack of supply vs demand.

My point elsewhere in this thread is a that demand is not entirely a function of demand for homes (what I would call 'natural' demand). Finance and tax incentives play a large part too - encouraging demand for investment properties that are often not used as homes (what I would call 'artificial' demand).

This is not to say that addressing supply through more building is not helpful, just that there are other things to consider that may not require as much effort and can have broader economic benefits (e.g. changes to the tax system to encourage productive rather than unproductive investment, credit guidance, etc).

Post reply on HN