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Priced out of home ownership

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Re: Priced out of home ownership

#471

Post by camgunz »

shuckles wrote: post #322
screye wrote: post #304

Earlier quoted context omitted.

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.

I think the general premise is housing can't both be so cheap that people with nearly no net worth can get it, but so valuable that it can serve as a substitute for retirement savings. This is from first principles true, but it's really only a problem in urban areas: my pet theory is that spiking demand for urban housing is driving 100% of this. Americans used to move far more than they do now [move], even when you factor in the pandemic, and they used to be more comfortable living in all kinds of different places, but now people move to cities and stay put. This is for all kinds of reasons, all under the category "it sucks not to live in a city for almost everyone". Economic opportunity is way, way lower [econ]. Racism, misogyny, homo/transphobia, hyper religiosity, and lack of diversity are huge problems. Urban schools dramatically outperform rural schools [schools]. Health care is harder to get [health care]. I think the data bear me out here; in particular general homeownership rates are basically what they were in 1963 [homeownership], but urban homeownership rates are way below the average [urban homeownership].

There are some signs that this trend is reversing, but I think that was entirely a pandemic phenomenon. Big numbers of Americans regret their pandemic moves [regrets], so I think the environment hasn't actually changed.

It's hard to see where this goes. Most other places solve this by becoming very very dense (Hong Kong) or building great mass transit (Tokyo). It really seems like the US won't do either of those things--maaaaaaybe NYC will but that would be all. I tentatively predict that we have to wait for most of the Boomers to die and leave their wealth/houses to Millennials before we know if this is a bona-fide societal crisis or not: if enough Millennials get what they want this way it'll take the oomph out of any kind of policy change (probably reverse the momentum actually--if anyone thinks Millennials will be any better than Boomers they're super mistaken).

But, neither outcome is really good. On the one hand you have the daunting prospect of a dramatic economic reorganization of the most powerful nation on Earth. On the other you have the calcification of the most powerful nation on Earth into something fundamentally unequal, illiberal and corrupt.

[move]: https://www.census.gov/library/visualizations/time-series/de...

[econ]: https://www.pbs.org/newshour/nation/six-charts-illustrate-di...

[schools]: https://insight.kellogg.northwestern.edu/article/education-g...

[health care]: https://www.gao.gov/blog/why-health-care-harder-access-rural...

[homeownership]: https://fred.stlouisfed.org/series/RHORUSQ156N

[urban homeownership]: https://www.census.gov/newsroom/blogs/random-samplings/2016/...

[regrets]:

https://homebay.com/moving-trends/

https://homebay.com/moving-trends-2024/

Re: Priced out of home ownership

#472

Post by digbybk »

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 hear this argument a lot and always wonder if the causal direction is flipped: people use housing as an investment because it’s scarce, not that it’s scarce because it’s used as an investment. If there weren’t so many restrictions on building, the supply would grow to meet the demand and parking your money in property wouldn’t be such a hot idea.

Re: Priced out of home ownership

#473

Post by ZoomerCretin »

tmnvix wrote: post #457
ZoomerCretin wrote: post #454

Earlier quoted context omitted.

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 signif…

You clearly did not look at any of my sources.

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

You have zero evidence for this claim and cited zero sources.

>The number of homes per 1000 people changed very little between 2011 and 2022. At the same time prices went from NZD350k to NZD900k.

You cannot look at an entire country's housing/population ratio and think that explains everything. New homes in Queenstown don't reduce housing costs for people in Auckland or Christchurch. You need to look at the supply of housing in an area where it is a substitutable good: where you can switch housing without switching your job, school, friends, and life.

A new house 6 hours from me does not lower the price of housing in my neighborhood.

Re: Priced out of home ownership

#474

Post by anon291 »

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 don't understand. Does Portugal not allow squatting? How can there be vacant land that no one wants? Surely someone would just go squat and make money living off of it.

Re: Priced out of home ownership

#475

Post by tmnvix »

aegypti wrote: post #352
tmnvix wrote: post #341

Earlier quoted context omitted.

It's the difference between 2011 and 2022 that I was highlighting. Unfortunately the document doesn't show changes in vacancy rate.

The difference showing that Ireland, Canada, New Zealand, and the US had either the same, or more dwellings per thousand inhabitants in 2011 than 2022? I don’t know if I’m just misunderstanding your point, or misreading the material, but that is also not an example of underutilization.

My point is that the relatively static proportion of people to dwellings in those countries over that period suggests that a supply shortage is not sufficient to explain the accommodation crisis.

What I am suggesting is that incentives to invest in property have led to an increase in the number of properties that are not being used as a primary residence (i.e. are underutilised) and that that is the most significant factor causing the shortage of available homes.

Re: Priced out of home ownership

#476

Post by matwood »

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

> Higher rates don't do anything because incumbent owners simply pull houses off the market to wait it out.

You need a recession.

Re: Priced out of home ownership

#477

Post by estebank »

Arainach wrote: post #425
johngladtj wrote: post #416

Earlier quoted context omitted.

>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.

Segregating housing from industry makes sense, and is what's done everywhere, but segregating housing from services, like coffee shops or day-care, is a very uncommon thing globally.

Re: Priced out of home ownership

#478

Post by Uvix »

NewJazz wrote: post #237
lr1970 wrote: post #181

Earlier quoted context omitted.

> It perplexes me, and the rest of our neighborhood, how someone can float a mortgage, much less an investment mortgage, without a renter. In the USA it is happening all the time because, surprisingly, landlords have little skin in the the game. LLC is the name of the game. Each investment property is "owned" by its own LLC that bares 100% of risks and liabilities associated with the property and shields the landlord…

Wait don't the assets include the property?

Yes, but if they can't find renters, the property is worthless anyways, so why bother keeping it?

Re: Priced out of home ownership

#479

Post by dools »

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 don’t know about those other places but Australia definitely has a horrendous under supply of homes
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