Why Ireland's housing bubble burst • Hacker News Board

Re: Why Ireland's housing bubble burst

#61

Post by Dylan16807 » Sun, Mar 31, 2024, 4:16 AM UTC

randomdata wrote: post #58

TulliusCicero wrote: post #51

Earlier quoted context omitted.

That simply isn't the colloquial definition of a shortage. If rent is $20,000/month for a studio, going "well technically you can always get one if you can pay $20,000 a month so there's no shortage" is kind of a uselessly pedantic comment.

I agree, in the case of "rent is $20,000/month" calling that a "shortage" doesn't say anything. It is no different than a case where "rent is $200/month". There is nothing the reader/listener can learn by adding shortage into the mix in either case. Pointless, yes, but I'm not sure pedantic is the right term for describing using a word in a way that does not communicate anything. But, to each their own.

You can set reasonable price benchmarks to define "shortage" by.

Your definition of shortage is too narrow. Price is always able to select a buyer. People will skip eating if you give them enough money. But if that only supplies a couple percent of buyers, that's not going to disprove a shortage.

Re: Why Ireland's housing bubble burst

#62

Post by SV_BubbleTime » Sun, Mar 31, 2024, 4:23 AM UTC

randomdata wrote: post #42

refurb wrote: post #39

Earlier quoted context omitted.

Canada had a massive housing crash in 1990. Housing pricing dropped in Toronto by 30% on average (less in the core, up to 50% in the suburbs). Home owners were screaming for relief. If you bought in 1989, you didn’t break even accounting for inflation until 2005 or later. The last decade has been Groundhog Day compared to the 80’s. Complaints of limited supply, people saying “these prices are the new normal”, people…

> wages are lower That may be true, but houses aren't that expensive. If you're, say, Austin Matthews making $13MM per year in Toronto, you can still buy a lot of houses. That capacity is not diminished by some tech mogul in SF making $130MM per year. The question is, as always, will something better come along? Indeed, housing is the purchase of last resort. Give people something better to buy and they will! People…

> The US housing market crashed back in 2006 because tech started showing promise ("Web 2.0", mobile shortly thereafter) and the money left housing to buy into the newfangled tech.

This is definitely the first time I’ve read this. Do you have more info on that?

Re: Why Ireland's housing bubble burst

#63

Post by randomdata » Sun, Mar 31, 2024, 4:30 AM UTC

Dylan16807 wrote: post #61

randomdata wrote: post #58

Earlier quoted context omitted.

I agree, in the case of "rent is $20,000/month" calling that a "shortage" doesn't say anything. It is no different than a case where "rent is $200/month". There is nothing the reader/listener can learn by adding shortage into the mix in either case. Pointless, yes, but I'm not sure pedantic is the right term for describing using a word in a way that does not communicate anything. But, to each their own.

You can set reasonable price benchmarks to define "shortage" by. Your definition of shortage is too narrow. Price is always able to select a buyer. People will skip eating if you give them enough money. But if that only supplies a couple percent of buyers, that's not going to disprove a shortage.

> You can set reasonable price benchmarks to define "shortage" by.

If there is some kind of useful benchmark, exclaiming "shortage" doesn't tell you anything about that benchmark. Again, nothing is communicated. Pointless, indeed.

> Price is always able to select a buyer.

Always, except for when there is a shortage. There are all kinds of examples of where price cannot select a buyer, most commonly as a result of government intervention making it illegal to pay more than a certain price, leaving many buyers all willing to pay the maximum allowable price for a given good or service, thereby requiring some other kind of mechanism, such as a lottery, to determine the 'winner'.

Re: Why Ireland's housing bubble burst

#64

Post by refurb » Sun, Mar 31, 2024, 4:45 AM UTC

randomdata wrote: post #42

refurb wrote: post #39

Earlier quoted context omitted.

Canada had a massive housing crash in 1990. Housing pricing dropped in Toronto by 30% on average (less in the core, up to 50% in the suburbs). Home owners were screaming for relief. If you bought in 1989, you didn’t break even accounting for inflation until 2005 or later. The last decade has been Groundhog Day compared to the 80’s. Complaints of limited supply, people saying “these prices are the new normal”, people…

> wages are lower That may be true, but houses aren't that expensive. If you're, say, Austin Matthews making $13MM per year in Toronto, you can still buy a lot of houses. That capacity is not diminished by some tech mogul in SF making $130MM per year. The question is, as always, will something better come along? Indeed, housing is the purchase of last resort. Give people something better to buy and they will! People…

> If you're, say, Austin Matthews making $13MM per year in Toronto, you can still buy a lot of houses.

If you look at the statistics, the houses in Canada aren't being bought up by rich people, they are being bought by middle and upper-middle class Canadians. Even the "investors" tend to be individuals buying one housing unit as an "investment".

> The US housing market crashed back in 2006 because tech started showing promise

That's wildly revisionist and doesn't really make sense. "Tech started to show promise" so you're saying that people stopped by homes? How many middle class Americans (who make the majority of home owners) shifted their investments from housing to speculative tech stocks? I think you overestimate the penetration of tech into the middle class - most people I knew hadn't even heard of AirBnB until 5+ years after they become "hot" in Silicon Valley.

Re: Why Ireland's housing bubble burst

#65

Post by justahuman74 » Sun, Mar 31, 2024, 4:48 AM UTC

RowanH wrote: post #40

tmnvix wrote: post #22

Earlier quoted context omitted.

Yes, the author (correctly, in my opinion) raises the issue of tax incentives. There are similar distortions in the Australian and NZ tax systems (mostly around taxation of capital gains). What the author fails to emphasise more - and really should given the title of the article - is the part played by availability of credit. This was the nail in the coffin. It's possible to come away from this article with the impre…

Kiwi checking in ... crossing fingers we're not about to enter the crash stage, but certainly the contrast in the past 2-3 years from property just flying out the door (low interest rates) to now (high-ish interest rates, lots of low rate mortgages rolling over) are very stark. Auction clearance rates are well, well down. Lots of houses getting passed in at auction which would have been unthinkable a few years ago. S…

Is the high migration popular given housing price effects?

Re: Why Ireland's housing bubble burst

#66

Post by Dylan16807 » Sun, Mar 31, 2024, 4:58 AM UTC

randomdata wrote: post #63

Dylan16807 wrote: post #61

Earlier quoted context omitted.

You can set reasonable price benchmarks to define "shortage" by. Your definition of shortage is too narrow. Price is always able to select a buyer. People will skip eating if you give them enough money. But if that only supplies a couple percent of buyers, that's not going to disprove a shortage.

> You can set reasonable price benchmarks to define "shortage" by. If there is some kind of useful benchmark, exclaiming "shortage" doesn't tell you anything about that benchmark. Again, nothing is communicated. Pointless, indeed. > Price is always able to select a buyer. Always, except for when there is a shortage. There are all kinds of examples of where price cannot select a buyer, most commonly as a result of gov…

Do you think there can only be shortages if there's price fixing?

If not, please give an example that doesn't involve price fixing.

I'll give an example for my argument: If there's only enough food for 90 people out of 100 today, it's easy for anyone with enough money to get fed, but it is also a shortage of food.

Re: Why Ireland's housing bubble burst

#67

Post by randomdata » Sun, Mar 31, 2024, 5:02 AM UTC

refurb wrote: post #64

randomdata wrote: post #42

Earlier quoted context omitted.

> wages are lower That may be true, but houses aren't that expensive. If you're, say, Austin Matthews making $13MM per year in Toronto, you can still buy a lot of houses. That capacity is not diminished by some tech mogul in SF making $130MM per year. The question is, as always, will something better come along? Indeed, housing is the purchase of last resort. Give people something better to buy and they will! People…

> If you're, say, Austin Matthews making $13MM per year in Toronto, you can still buy a lot of houses. If you look at the statistics, the houses in Canada aren't being bought up by rich people, they are being bought by middle and upper-middle class Canadians. Even the "investors" tend to be individuals buying one housing unit as an "investment". > The US housing market crashed back in 2006 because tech started showin…

> the houses in Canada aren't being bought up by rich people, they are being bought by middle and upper-middle class Canadians.

Sales don't happen in a vacuum. The middle and upper-middle have to pay that much because second in line is willing to pay almost as much. Matthews could make an offer of $999,999 on every house for sale in Toronto. He may not get any of them in the end, but in doing so he forces you to pay at least $1,000,000 if you want one.

After all, if you were the only interested party you could just throw a couple of bucks out there and eventually some seller will have to give in. Landowners will not hold a property only worth a couple of bucks in perpetuity. If nothing else, property taxes will eventually compel them to unload it. It's other interested buyers that push you to pay more.

> "Tech started to show promise" so you're saying that people stopped by homes?

Sure. Again, not a vacuum. To stick with the hypothetical for the sake of illustration, let's say Matthews was making such offers but now is enthralled by some AI startup in Montreal instead. By removing those $999,999 offers from the equation, that gives more room for you to come in at a lower price.

Re: Why Ireland's housing bubble burst

#68

Post by randomdata » Sun, Mar 31, 2024, 5:14 AM UTC

Dylan16807 wrote: post #66

randomdata wrote: post #63

Earlier quoted context omitted.

> You can set reasonable price benchmarks to define "shortage" by. If there is some kind of useful benchmark, exclaiming "shortage" doesn't tell you anything about that benchmark. Again, nothing is communicated. Pointless, indeed. > Price is always able to select a buyer. Always, except for when there is a shortage. There are all kinds of examples of where price cannot select a buyer, most commonly as a result of gov…

Do you think there can only be shortages if there's price fixing? If not, please give an example that doesn't involve price fixing. I'll give an example for my argument: If there's only enough food for 90 people out of 100 today, it's easy for anyone with enough money to get fed, but it is also a shortage of food.

> Do you think there can only be shortages if there's price fixing?

Clearly not. I just got finished pointing to government intervention as the most likely reason for a shortage. How did you manage to not finish reading the comment before replying?

Price fixing can also theoretically lead to a shortage, but this is the least likely case. Usually price fixers want to push the price higher than buyers are looking to spend, not the other way around.

> If there's only enough food for 90 people out of 100 today, it's easy for anyone with enough money to get fed, but it is also a shortage of food.

Agreed, in two ways:

1. It is apt to end up a shortage as many governments have 'price gouging' laws that would prevent the vendor of that food from charging the fair market value in this type of event.

2. In this scenario, eventually no amount of money can buy food. You could be the richest person on earth, willing to spend every last cent you have, but you're still not eating if you happen to come late to the party. Price is unable to select a buyer, relying on a first-come, first-served mechanism instead.

That doesn't match the housing situation, though. The richest person in the world isn't going to find himself unable to buy a home, even if he takes his sweet time deciding whether he wants one or not. Even at the peak of housing insanity, there were still many houses available for purchase by anyone in the market.

Re: Why Ireland's housing bubble burst

#69

Post by pixelatedindex » Sun, Mar 31, 2024, 5:26 AM UTC

tmnvix wrote: post #5

> Ireland had arguably the world’s largest housing bubble and crash in the 2000s, with prices quadrupling in the decade to 2007, even while supply soared , before crashing by more than half between 2007 and 2012. (emphasis mine) That wasn't the accepted wisdom at the time. Prices going up spelled 'supply shortage' to most. When the tide went out (i.e. credit availability) it revealed an oversupply. We should learn fr…

> Demand comes in two forms. Demand for housing and demand for property investments. We should not lose site of the drivers of the second type of demand.

Has the US ever lost sight of the second kind? To me (as someone who feels hopeless about home ownership) that seems to be the only demand we care about. There’s barely anything new being built, constant blocking by NIMBYs, and investors buying up so much property when interest rates were dirt cheap. I really wish there would be some form of housing market crash but it’s nowhere in sight. My biggest fear is it’s going to come the moment I do end up buying after saving so much.

Re: Why Ireland's housing bubble burst

#70

Post by haizhung » Sun, Mar 31, 2024, 6:24 AM UTC

mandmandam wrote: post #14

Gary Stevenson [0] is the only economist who makes sense to me on this issue. He mostly speaks about the UK but we're basically all in similar boats with house prices across the English speaking world. Gary put his money where his mouth is, and was the world's most successful trader for three years running. However, since he talks in a candid and coherent manner about inequality and the stunts the ultra-wealthy pull,…

Very good video. The quote that stood out to me was „This is what happens when a country has basically given up on taxing the rich“.

I wonder why this is happening all over the planet. Shouldn’t there at least be some countries that try to remedy this? Why do ALL the countries have given up on taxing the rich, when, just ~100 years ago, we had massive taxation on wealth even in the US?