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Priced out of home ownership

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Re: Priced out of home ownership

#451

Post by dzhiurgis »

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…

> is there maybe some other common cause?

Immigration. It's not that immigrants buy up the houses (opposites, we tend to live cramped up in flat shares). It's that they support landlords profits (with cream on top of not knowing your rights) and have overall pressure on market.

Building should at least match immigration/population growth.

Also not building dense enough. Kiwis always tout "I wouldn't wanna live in a house without a backyard" - well I don't wanna rent forever either. Given choice of no housing and shitty housing I choose shitty housing.

Re: Priced out of home ownership

#452

Post by joecool1029 »

WalterBright wrote: post #399
FactKnower69 wrote: post #310

Earlier quoted context omitted.

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…

A lot of houses are empty simply because they are for sale. It's not unusual to take 6 months to sell. Nobody is going to want homeless people living in it in the meantime. Houses are also "empty" while they are undergoing renovation.

> A lot of houses are empty simply because they are for sale. It's not unusual to take 6 months to sell.

A thought: Disincentivize having them for sale for too long, tax a % of the listing price every year it's on the market. That way gougers get penalized for crazy asking prices and there's some additional negative price pressure.

Re: Priced out of home ownership

#453

Post by sunshowers »

djbusby wrote: post #377
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?

My favorite features of mortgage vs rent is that mortgage is constant. So, in 10/yr I'm still paying $2000/mo while rents have moved to $3200/mo

This is a creation of the US federal government — a 30 year fixed makes no sense without government intervention, since that is an absurd level of interest rate risk the bank would need to take. I don't know of any other country with 30 year fixed mortgages — most have something similar to the 5/1 ARM as the main option.

edit: Seems like Germany has fixed mortgages but makes it hard to refinance.

Re: Priced out of home ownership

#454

Post by ZoomerCretin »

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 akin to denying the existence of climate change or evolution, or that the Earth revolves around the Sun.

Yes, housing prices are determined by supply and demand.

This was found to be true by a California Circuit of Appeals: https://x.com/CSElmendorf/status/1774115015551074434

This is found to be true by Blackstone, who frequently notes that shortages and low increases in new supply are fundamental to their strategy of buying and building housing for rent: https://x.com/RikAdamski/status/1643477536695803904 https://x.com/IDoTheThinking/status/1378737834824060931 "We could also be adversely affects by overbuilding or high vacancy rates of homes in our markets, which could result in an excess supply of homes and reduce occupancy and rental rates."

There are plenty of sources which show a strong correlation between new supply and housing prices: https://x.com/sam_d_1995/status/1762597879154123241 https://x.com/JeremiahDJohns/status/1761205726230216943 https://x.com/ArmandDoma/status/1770961181093859375 https://x.com/jayparsons/status/1761028332781478227 (STRONGEST:) https://x.com/JeremiahDJohns/status/1761205728356802806

There is plenty of unused space in our cities for new housing: https://x.com/ftw_cool/status/1779228107754623084

Texas vs California; Texas builds a lot and has lower housing price growth, California builds little and has high housing price growth: https://x.com/jburnmurdoch/status/1760995124690231526

This effect holds regardless of if the new housing is "affordable", "below-market rate", or "luxury": https://x.com/jayparsons/status/1712110658601255211

That supply and demand applies to housing has been reported repeatedly in the news: https://x.com/AlecStapp/status/1757939504126832802

Lots of new apartments have been built lately. The effect on rent growth is obvious: https://x.com/mnolangray/status/1755818637750161540

Landlords themselves acknowledge the difficulty of finding tenants and getting high rents when there is a glut of housing inventory: https://x.com/sam_d_1995/status/1752346758254887132

Surprisingly, supply and demand also affect housing prices in the Midwest: https://x.com/StatisticUrban/status/1752008654734147718

Real estate investors and landlords acknowledging that new construction lowers rents and increases vacancies in their properties: https://x.com/SmackTrout/status/1652396524389961731

Re: Priced out of home ownership

#455

Post by speeder »

Chris2048 wrote: post #412
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…

Is this also an issue in cities like Lisbon?

Lisbon is where the issue is the worst of all. When I had a job, I had to choose the office where I would work. I deliberately avoided the Lisbon office because I knew there was no realistic chance I would find a place to live there with my family with Portuguese wages.

Re: Priced out of home ownership

#456

Post by Tactician_mark »

itake wrote: post #382
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. Pac…

Your argument about increasing demand for services isn't convincing. Since there are more people in the area, should supply be higher as well, balancing prices?

It seems more likely that costs are higher in cities because there are valuable opportunities for skilled people who demand high salaries, simultaneously encouraging dense living to maximize access and increasing cost of living through the Baumol effect. High prices causing density, not the other way around.

Re: Priced out of home ownership

#457

Post by tmnvix »

ZoomerCretin wrote: post #454
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 akin to denying the existence of climate change or evolution, or that the Earth revolves around the Sun. Yes, housing prices are determined by supply and demand. This was found to be true by a California Circuit of Appeals: https://x.com/CSElmendorf/status/1774115015551074434 This is found to be true by Blackstone, who frequently notes that shortages and low increases in new supply are fundamental to their st…

I am not denying that the number of properties relative to people has an effect - but I am arguing that this is insufficient as an explanation for what has happened with regard to prices recently.

See my earlier comment regarding NZ. The number of homes per 1000 people changed very little between 2011 and 2022. At the same time prices went from NZD350k to NZD900k.

I think my suggestion that finance is the most significant factor here is a stronger argument than a supply shortage.

Re: Priced out of home ownership

#458

Post by ZoomerCretin »

cgh wrote: post #441
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, at one time it was estimated that roughly 1/3 of Vancouver’s condo supply was vacant. So the city implemented an empty homes tax [0] and promptly raised $115,000,000 in tax revenue [1]. However, the tax is still far too low and it contains various loopholes that allows developers to hold condos empty for years until deep-pocketed buyers show up [2]. Vancouver isn’t unique. Housing is being traded like poker chip…

Vancouver has obscene housing prices because the city and the politically connected spend tens of thousands of hours fighting against any new housing, and any new supply. Just look at what happened when the Squamish Nation decided they were going to build high rises on the land they were given: https://reason.com/volokh/2024/03/14/canadian-indigeneous-na...

The entire city and all of the NIMBYs cried about their "neighborhood character" and tried every legal trick they could to block the development: threatening to not connect it to utilities.

Vancouver literally has single family homes within half a mile of downtown! Clearly there is room for growth.

Re: Priced out of home ownership

#459

Post by AmVess »

pfdietz wrote: post #439
killjoywashere wrote: post #386

Earlier quoted context omitted.

> 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?

Eliminate regulations and laws limiting supply.

Where I used to live, it cost $7k to get a plot of land ready to build on. Today, that cost is $70k and 6months to 1y to get past all the permits and paperwork. And then having to deal with a governing body that doesn't understand how money works, and it is no surprise no one builds affordable houses anymore.

Re: Priced out of home ownership

#460

Post by iteria »

joecool1029 wrote: post #452
WalterBright wrote: post #399

Earlier quoted context omitted.

A lot of houses are empty simply because they are for sale. It's not unusual to take 6 months to sell. Nobody is going to want homeless people living in it in the meantime. Houses are also "empty" while they are undergoing renovation.

> A lot of houses are empty simply because they are for sale. It's not unusual to take 6 months to sell. A thought: Disincentivize having them for sale for too long, tax a % of the listing price every year it's on the market. That way gougers get penalized for crazy asking prices and there's some additional negative price pressure.

All that would result in is less transparency. People wouldn't put their house openly for sale anyone and you'd just create informal market places. Or worse people would just hang onto properties and not sell them at all, biasing towards turning houses into rentals.
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