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Priced out of home ownership

bbc.co.uk

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Re: Priced out of home ownership

#631

Post by amelius »

pizzafeelsright wrote: post #505
amelius wrote: post #447

Yes, and I think there is some truth to the statement that the older generations are stealing from the younger generations, whatever the underlying financial/technical explanation may be. The game is rigged. But that should be no surprise. People who enter a game of Monopoly after a few rounds have been played know that they will be swimming against a strong current. Our financial systems are unfair and broken.

I can't say I see it the same way. We're born in a year we didn't choose to parents we didn't pick with talent we didn't earn with intelligence we don't deserve with environmental influences we can't control. The game is Texas Hold em. Play your cards. Bluff if you must. Press if you can. Go all in when you can leverage. I recently got to know a gentleman quite like myself. His parents and upbringing are quite the sa…

> You can get upset about the game or play it.

You've got to think outside the box.

Do we want a society that rewards gambling behavior, or do we want to reward honest hard working? Apparently we cannot have both, because we are now observing that increasingly money (and bricks) makes more money than honest work. You can keep playing the game until there are only survivors and losers but ultimately we need people who do real work.

Unless of course you want to turn those hardworking people into the slaves of the surviving gamblers.

Re: Priced out of home ownership

#632

Post by AnthonyMouse »

zdragnar wrote: post #594
AnthonyMouse wrote: post #583

Earlier 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…

I think they answered in a curt but succinct way: > when you build you just fuel the vicious cycle of people -> opportunities -> people So long as a place is desirable to live, people will keep moving there. Obviously there's a logical limit to the argument- things get weird when you build more housing than there are people- but then so too do the logistical issues of sewer, water, electricity, and geology (some loca…

> So long as a place is desirable to live, people will keep moving there.

The underlying premise being that they're moving to this place from some other place. But that has an obvious solution: Build more housing everywhere. People can't increase the population of everywhere by moving from everywhere to everywhere.

It also implies that building it in one place still helps to reduce the cost somewhere else. If you make San Jose more attractive and people move from San Francisco to San Jose then you're reducing demand in San Francisco and lowering the prices there.

> Obviously there's a logical limit to the argument- things get weird when you build more housing than there are people- but then so too do the logistical issues of sewer, water, electricity, and geology (some locations simply aren't economical to build high rise buildings on).

The constraints at the physical limit are irrelevant because you don't need to get anywhere close to it. The point is that you could if you had to, not that you actually have to.

Re: Priced out of home ownership

#633

Post by AnthonyMouse »

Rury wrote: post #618
AnthonyMouse wrote: post #583

Earlier 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…

Just trying to entertain the thought... It would seem to me that more supply = more construction + more maintenance + more taxes = more costs. And these costs must go somewhere. Obviously, they would fall under the landlords responsibility, but they probably would try to pass on these costs as much as possible. Now this is where it gets iffy... Vacancies don't earn revenue, and so obviously would be costly to landlor…

> It would seem to me that more supply = more construction + more maintenance + more taxes = more costs.

More total costs divided by more total units is just the same cost per unit, if not lower because of economies of scale.

> Rents therefore increase, despite there being more supply.

If there is a monopoly landlord then rents will be at the monopoly rent whether you increase supply or not. Even then increasing supply could lower rents, because the monopoly landlord could capture more rents by charging $9000/month on twice as many units than $10,000/month on half as many units, and can't charge $10,000/month on twice as many units because there aren't enough tenants who can afford that.

Also, the premise here is that you're increasing supply. The monopoly landlord would have to outbid everybody else for the new supply or they'd lose their monopoly, and have to pay the monopoly price or else the new units would be cheaper than their existing ones. But then the construction companies would be receiving the monopoly price and become flush with cash to build even more housing until the monopoly landlord ran out of money.

There is a reason landlords collude through zoning boards: It's otherwise quite easy for someone new to enter the market.

Re: Priced out of home ownership

#634

Post by robertlagrant »

pcrh wrote: post #509
robertlagrant wrote: post #372

The problem is lack of supply vs demand. In 2022,England and Wales: - built 254000 homes[0] - had 745,000 people immigrate (net)[1] - had 600000 people turn 21[2] - had 577160 people die[3] If you gain a load of people, far more than you increased dwellings for, prices will go up and dwelling size will go down. It's not particularly complicated. [0] https://www.savills.co.uk/research_articles/229130/357082-0 [1] http…

On the other hand: There were an estimated 28.1 million households in the UK in 2021, an increase of 6.3% over the previous 10 years. [0] and: The UK population at mid-year 2021 was estimated to be 67.0 million, an increase of 3.7 million (5.9%) on the population in mid-2011.[1] So the number of UK households increased by slightly more than the population between 2011 and 2021. [0] https://www.ons.gov.uk/peoplepopula…

I think that's part of it - houses are chopped up into two flats, or are registered as HMO[0]s, so more people are living in the same space. That's what I meant by "dwelling size will go down", above. This also drives up prices, as two flats will sell for more than one house would've, given the current lack of supply.

[0] https://www.gov.uk/private-renting/houses-in-multiple-occupa...

Re: Priced out of home ownership

#635

Post by robertlagrant »

tmnvix wrote: post #430
robertlagrant wrote: post #372

The problem is lack of supply vs demand. In 2022,England and Wales: - built 254000 homes[0] - had 745,000 people immigrate (net)[1] - had 600000 people turn 21[2] - had 577160 people die[3] If you gain a load of people, far more than you increased dwellings for, prices will go up and dwelling size will go down. It's not particularly complicated. [0] https://www.savills.co.uk/research_articles/229130/357082-0 [1] http…

> The problem is lack of supply vs demand. My point elsewhere in this thread is a that demand is not entirely a function of demand for homes (what I would call 'natural' demand). Finance and tax incentives play a large part too - encouraging demand for investment properties that are often not used as homes (what I would call 'artificial' demand). This is not to say that addressing supply through more building is not…

> demand for investment properties that are often not used as homes

Could you elaborate? How often is "often" in the context of the whole country?

> This is not to say that addressing supply through more building is not helpful, just that there are other things to consider that may not require as much effort and can have broader economic benefits (e.g. changes to the tax system to encourage productive rather than unproductive investment, credit guidance, etc).

If the UK is gaining enough people to require multiple cities the size of Oxford to be built each year to accommodate them, it would be surprising to find that the main issue is people are replacing houses with other buildings.

Re: Priced out of home ownership

#636

Post by formerly_proven »

pdonis wrote: post #186
formerly_proven wrote: post #61

Earlier quoted context omitted.

The good ol' "subsidize demand" approach to reducing prices. And if prices continue to climb? Well, just subsidize demand harder and in more diverse ways. I assure you, eventually price will fall. You just haven't subsidized the demand side enough yet.

The GP didn't say "subsidize demand". They said "increase supply". They're different things.

It's a response to his summary of the article, not a contradiction.

> the measures mentioned in the article — lower interest rates, lower transaction fees, down payment subsidies

Re: Priced out of home ownership

#637

Post by rpigab »

MainlyMortal wrote: post #443

U.K. view here... and I'd guess this applies the the majority of the world too. I was born in, grew up in and currently live in a location that the HN community never even thinks about. Most people in here have no idea of how the regular 99% live and then base their whole world view on expensive capital cities and hold the strangest views of housing. I bought my current house in the 2010s, my mortgage is still half t…

You bought your house in 2010, if today in 2024 you had no house and had to buy one, could you? Haven't the mortgages and house prices increased a lot more than most salaries even in the remote countryside? (Just like the article says)

Also, remote countryside is cheap in most countries, but unless you can do 100% remote, they are very few jobs there.

Re: Priced out of home ownership

#638

Post by atemerev »

elevatedastalt wrote: post #398
atemerev wrote: post #40

Pff, in Switzerland, the mean age of the first-time home buyer is 48, and the mean age of a homeowner is 58. And those are the luckiest and the richest who could actually afford buying a house; many rent for life.

I am not sure that a tiny country that's smaller than 40 US states is a useful model for what kinds of homeownership can work.

This is not a useful model; in fact, things are quite bad here. I just wanted to say that US homeownership is absolutely exceptional, has no analogues anywhere else, and exists only by means of extensive government support. In most other countries, buying a house in your thirties is absolutely unimaginable.

Re: Priced out of home ownership

#639

Post by rpigab »

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?

If it was a universally better financial decision to not buy a home, then who would you rent a home from? Someone who made a bad financial decision?

If this was the case, then there would be more and more renters, and less and less tenants, so rent would increase, and make homeowning a better financial decision. There's a stable equilibrium there, even taking into account the various taxes involved.

Re: Priced out of home ownership

#640

Post by refurb »

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

But insurance, property taxes and maintenance costs keep going up
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