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

581–590 of 1001 posts

Re: Priced out of home ownership

#581

Post by jltsiren »

Wytwwww wrote: post #383
dan-robertson wrote: post #351

Earlier quoted context omitted.

> 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…

Housing affordability is qualitatively different between Europe and the US. When a European city is expensive, it's usually only the central part that's expensive. Prices drop steeply as you get to the suburbs and satellite towns. In the US, suburbs and satellite towns are more likely to remain expensive, as long as you are within a semi-reasonable commuting distance. I guess that's because the US city is more likely expensive due to the job market and the European city due to the desirability of the city itself.

Re: Priced out of home ownership

#582

Post by [deleted] »

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…

[deleted]

Re: Priced out of home ownership

#583

Post by AnthonyMouse »

the_gipsy wrote: post #512
neilwilson wrote: post #336

Earlier quoted context omitted.

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…

Lack of building is not the problem - on the contrary. You cannot realistically build enough so that the rents decrease. And when you build you just fuel the vicious cycle of people -> opportunities -> people.

> You cannot realistically build enough so that the rents decrease.

I'm curious what makes you think this.

Suppose you built twice as many housing units as you had residents. Rents wouldn't decrease? Why not?

Or do you think that a sufficient amount of housing wouldn't fit? For reference, the San Francisco metro area has ~7.5M people in an area of ~3500 square miles. With housing at the population density of Manhattan, the number of people who could be housed in that area is approximately 250M people, i.e. three quarters of the entire US population. Obviously you wouldn't do this, but you could, so that can't be the constraint.

Re: Priced out of home ownership

#584

Post by AnthonyMouse »

itake wrote: post #465
Tactician_mark wrote: post #456

Earlier quoted context omitted.

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…

> Since there are more people in the area, should supply be higher as well, balancing prices? I think we are starting a conversation about gentrification: Rich white-collar/coat workers move into an area creating demand for service work. There is some price competition for their service work labor, raising wages, but typically housing costs are too high for these workers, so they leave (lowering supply, pushing up wa…

But this is just assuming the conclusion. Suppose that you were to increase the housing supply as much as, or more than, the increase in population. The existing lower-wage workers don't have to leave until prices have already increased to price them out, so their leaving can't have been the cause of the higher prices but rather its effect.

So it's a feedback loop, but one which is prevented by keeping supply enough to meet demand, because then lower paid workers aren't priced out and cost of living doesn't increase.

Re: Priced out of home ownership

#585

Post by Hammershaft »

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…

A land value tax would fix this.

https://www.gameofrent.com/

Re: Priced out of home ownership

#586

Post by spankalee »

killjoywashere wrote: post #386
neilwilson wrote: post #336

Earlier quoted context omitted.

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?

Yes.

One of the ways government can help us by funding counter-cyclical building, keeping the sector afloat and preventing supply crunches when a recession ends.

Re: Priced out of home ownership

#587

Post by lotsoweiners »

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?

> Is it not also the case that interest payments on a residential mortgage are tax deductible in the US?

They are only if you itemize your taxes nowadays. During the Trump administration the tax law changed so that the vast majority of Americans now take the Standard Deduction. I received the mortgage interest deduction for about 15 years but haven’t received it for 5-6 years now.

Re: Priced out of home ownership

#588

Post by gravescale »

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.

Also consider that many 3rd bedrooms in the UK are tiny. Like, "don't fit single bed frames and allow the door to open properly" tiny.

Re: Priced out of home ownership

#589

Post by AnthonyMouse »

dogcomplex wrote: post #502
digbybk wrote: post #472

Earlier quoted context omitted.

> 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…

Tbf many of those restrictions are there for good city planning reasons - and important to keeping a city livable and not outgrowing its infrastructure. But the cost of enforcing those is quite often a ridiculously bogged-down planning department that often takes months or a year to process applications and revisions, significantly inflating the risk and thus costs of construction, and relegating it to big firms that…

> Tbf many of those restrictions are there for good city planning reasons - and important to keeping a city livable and not outgrowing its infrastructure.

I don't believe this to be true. If someone wants to build a single multi-story building in an area, no additional infrastructure should be required. It's one building, the existing infrastructure shouldn't have so little slack in it that this could be a problem.

If lots of people are building lots of buildings, the city government can notice this taking place and while the buildings are going up they expand the capacity of the infrastructure in that area. It's no excuse to refuse the construction, it's just something the city has to do as a result, because that is a city's job.

Their job is not to decide what can be built, it's to allocate the property tax on the new buildings to paying for the things the new buildings need.

Re: Priced out of home ownership

#590

Post by Auracle »

masterj wrote: post #219
Auracle wrote: post #204

Earlier quoted context omitted.

I’ll keep shouting this from the rooftops: while it may contribute in some areas, zoning laws are not the primary cause of home prices increasing like they have. For proof, look at any rural (and I mean actual rural) area and how their home prices have also been skyrocketing. It’s supply and demand, with other things being small factors. We either need to vastly increase supply across the entire country somehow, or c…

> zoning laws are not the primary cause of home prices > We ... need to vastly increase supply across the entire country somehow Zoning laws reduce available supply by making it illegal or impossible (due to e.g. parking minimums) to build densely in most of the bigger cities in North America > For some reason it’s ok to talk about this in the context of Canada and how their mass immigration has increased home prices…

I know it’s hard for people that live in cities, but you all can’t see the forest for the trees. Even when talking about Canada’s issue you say they haven’t been able to make enough housing…in cities.

First off, they can’t make enough housing anywhere. There are only so many home builders, and at least in the US up until the last year they’ve all been absolutely swamped. It takes time for more people to learn trades.

When housing is cheap enough outside of cities people move there instead. We see it happen all the time, and it’d happen even more if rural home prices also weren’t going up like they have been - especially now that working from home is here to stay for plenty of companies.

Post reply on HN