What's scary is people don't understand how something being unaffordable is not much different from it being prohibited. And prohibition always leads to the rise of organized crime. Living in the Bay Area, I can't help but wonder if the homeless encampments are already under organized crime rule.
Priced out of home ownership
621–630 of 1001 posts
Re: Priced out of home ownership
#622Earlier quoted context omitted.
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.
Do lower house prices in a recession matter if no one has money, and everyone is being laid off from work? I feel like no one, except the very rich, benefits.
Re: Priced out of home ownership
#623Starting to sound like a broken record but land value tax + up zoning was the fix for this 100 years ago, and it still is today...
Because it'll lead to building more and higher utilization.
The problem with most comments in this post is they don't say how they'll get people to build. It requires incentives.
Has anywhere tried LVT?
Re: Priced out of home ownership
#624I am not an economist but if we would treat house ownership something that is beneficial for the whole society (less traffic from commuters, less homeless etc) and remove the speculations/foreign investments around housing? Why not apply the following: - every house not used for primary living place is highly taxed (removing all speculative ownership) - charge foreign investors heavily (australia will do this soon) -…
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Re: Priced out of home ownership
#625I am not an economist but if we would treat house ownership something that is beneficial for the whole society (less traffic from commuters, less homeless etc) and remove the speculations/foreign investments around housing? Why not apply the following: - every house not used for primary living place is highly taxed (removing all speculative ownership) - charge foreign investors heavily (australia will do this soon) -…
>> less traffic from commuters
I always rented within walking/biking distance to my work. Try that with a house.
Re: Priced out of home ownership
#626I find it a bit strange that the article (and also a lot of the discussion here) does not discuss the size of these houses (in square meters per person), or alternatively the distribution of the sizes/areas. I grew up in a 20 square meter per person apartment (with multiple person living there, for a total size of 60 square meters) - and it was definitely not pleasant. But I feel that nowadays people also expect a lo…
I grew up in a 20 square meter room, with multiple persons living in that same room, and multiple families living in the other rooms of the apartment ... I built private quarters for myself on top of a wardrobe, where my parents couldn't easily reach.
Re: Priced out of home ownership
#627Earlier 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…
> I don’t know why prices are still up though – if interest rates being high was making housing unaffordable, one would expect prices to be down. This is counterintuitive, but also persistent across high-interest rate environments. I asked my mom what the housing market was like in 1980, when rates went up to ~20%, and she said "Prices were basically stable, but nobody was selling houses." Similarly, if you look at h…
I guess I was surprised by the increase mentioned in the article. Rereading, it says:
“The median home sale price, external in the US has jumped by nearly 30% since the end of 2019”
So I guess you could have the increase due to Covid effects (or whatever else happened around then) and then seller hesitancy due to high interest rates, even though most potential sellers don’t stand to lose much.
Re: Priced out of home ownership
#628Earlier quoted context omitted.
And yet housing prices in much of Asia is still insane. The only market that is sane is sort of Japan with a falling population and an aversion to property speculation due to getting burned on their last property bubble. Chinese housing market is completely messed up, with turn over almost halted since the government won’t let prices fall no matter what, while they have overbuilt like crazy.
> And yet housing prices in much of Asia is still insane. They're generally lower than the US, despite having a higher population density. > Chinese housing market is completely messed up, with turn over almost halted since the government won’t let prices fall no matter what, while they have overbuilt like crazy. A place with the government policy objective of not allowing housing prices to decrease isn't much of an…
> Whereas prices are significantly lower in e.g. India
I don't think so. Ask any indians about the cost of buying a property in eg. Mumbai.
This really is a global phenomenon. I don't know where the reluctance to admit that comes from (not you specifically, but in general).
Re: Priced out of home ownership
#629People 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…
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…
> Higher interest rates just mask the problem and hand more money to rich people for no effort.
What higher interest rates? We're nowhere near high interest rates.
Re: Priced out of home ownership
#630Earlier quoted context omitted.
> 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 Manhatta…
> Suppose you built twice as many housing units as you had residents. Rents wouldn't decrease? Why not? People make the same specious arguments about gpu production during mining booms etc. Surely producing more gpus will lower the price, or reduce the profit per gpu at least? Are you saying prices don’t fall with increased supply!?!? that’s a counterintuitive statement, Mr Bear! it just also turns out to be a true o…
> Surely producing more gpus will lower the price, or reduce the profit per gpu at least?
But that is what happens. The issue with GPUs is that a) there are only a small number of companies that make them b) fab capacity has to be booked in advance, and c) they know it's a bubble, so they're not going to commit to buying a large amount of future fab capacity when it could pop at any time. So then they don't actually increase supply, and prices don't go down.
> Maybe increasing the supply only increases the supply of luxury condos, which if they are all consumed by wealthy individuals might push housing prices upwards etc.
Only in the sense that the average cost might increase because the average unit is now larger, not in the sense that the existing smaller units would cost more rather than less. After all, their occupants no longer have to outbid the wealthy individuals who have put their money into the new luxury units instead.
> Such activity could, similar to bitcoin, actually stimulate enough economic activity in an area itself to sustain upwards trajectory on pricing
The premise here is that if you make an area more attractive then more people may want to live there. But that's fine. Suppose building 10 units increases demand by 5 units. So if you need 10 more units, build 20 more units.
In some kind of hypothetical edge case or rare circumstance, building 10 units might increase demand by 11 units, but that is obviously not sustainable -- if you built 50 million units, there aren't 50 million people in the region to live in the city, so at some point it stops being true, if it even ever was.
> Markets are weird and inefficient in all kinds of exciting ways!
This isn't markets being weird. If prices are high then construction companies want that money, which they get by building new housing. Weirdness only occurs when regulations interfere with their natural market incentive.