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Priced out of home ownership

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Re: Priced out of home ownership

#671

Post by spacemark »

baobabKoodaa wrote: post #303
spacemark wrote: post #296

Earlier quoted context omitted.

People always talk about how buying a home is the only way for the common person to obtain leverage. Please excuse my ignorance, but how does the common person use that leverage, exactly?

Example: House costs $100k You buy house with $20k savings and $80k debt In this example that $80k of debt is called "leverage". Is this what you mean with your question or did you mean to ask something else?

Right, my question is more about how the average person can actually use that leverage. So you've got $80k in leverage, it grows (presumably), but how do you actually use it?

You have to sell the house, right? So you can only cash in on that leverage when you reverse mortgage or otherwise downsize, right?

Re: Priced out of home ownership

#672

Post by m0llusk »

nostrademons wrote: post #615
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…

> 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…

That is the shape of housing market corrections. Housing prices are sticky because of a range of financial and emotional reasons. Because of this prices hardly ever crash outright. What happens instead are periods of price stagnation while inflation does the work of reducing real prices. And a real collapse of prices indicates neither wages nor financial devices could support the market any longer.

Affordable is a different issue. Housing assets exhibit strong depreciation under normal circumstances and extreme depreciation under any kind of stress. Affordable houses are used houses in a way similar to how used cars are fundamentally more affordable than cheap new cars.

Re: Priced out of home ownership

#673

Post by __MatrixMan__ »

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…

The solution is to make the property-as-an-investment a less lucrative perspective by occasionally sabotaging the property value of (but not the ability to safely live in) houses that are not being used to house people.

A few high profile jury nullifications would probably be sufficient, but we gotta be the rational economic agents that the theories think we are and work together on this.

Re: Priced out of home ownership

#674

Post by lotsofpulp »

Panzer04 wrote: post #560
jachee wrote: post #309

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've believed for a long time that heavily taxing income from second+ properties, similar to capital gains, would help reduce rent-seeker hoarding, to help free up and reduce the cost of properties for primary-residence owners.

How is this not a defacto transfer of wealth from renters to owners? Rental supply will go down due to reduced profits, and therefore ultimately rental prices as a whole will go up once a new equilibrium with fewer rentals is reached. These sorts of suggestions generally seem hugely biased towards buyers at the expense of everyone else.

Marginally higher and higher property taxes for non primary residences would deal with that.

Re: Priced out of home ownership

#675

Post by dleslie »

cgh wrote: post #441
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…

Yes, at one time it was estimated that roughly 1/3 of Vancouver’s condo supply was vacant. So the city implemented an empty homes tax [0] and promptly raised $115,000,000 in tax revenue [1]. However, the tax is still far too low and it contains various loopholes that allows developers to hold condos empty for years until deep-pocketed buyers show up [2]. Vancouver isn’t unique. Housing is being traded like poker chip…

3% vacancy tax producing $115M in revenue indicates roughly $3.8B in empty housing stock. Average condo prices in the CoV are roughly $2.1M, and so we can conclude there is likely around, or a little less than, 2000 empty condos hit by this tax.

That's not 1/3 of Vancouver's condo supply. Not by a long shot.

Re: Priced out of home ownership

#676

Post by _gabe_ »

SV_BubbleTime wrote: post #496
whoknowsidont wrote: post #196

Earlier quoted context omitted.

That's not the problem at all. Stop allowing people to buy multiple homes. Stop allowing landlords to "collaborate" on prices.

> Stop allowing landlords to "collaborate" on prices. lol. Yes, I remember at the 2022 landlords meeting we all decided to raise rents… because we never thought of that before!! Surely it has nothing to do with taxes and inflation, no, as a renter you should be shielded from that and we should pay it without passing it on!

Is the FTC unbiased enough for you?[0]. This is a real problem. Many landlords use the same software to determine how much to charge, this software is intended to maximize rent by fixing the price.

[0]: https://www.ftc.gov/business-guidance/blog/2024/03/price-fix...

Re: Priced out of home ownership

#677

Post by lazide »

__MatrixMan__ wrote: post #673
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…

The solution is to make the property-as-an-investment a less lucrative perspective by occasionally sabotaging the property value of (but not the ability to safely live in) houses that are not being used to house people. A few high profile jury nullifications would probably be sufficient, but we gotta be the rational economic agents that the theories think we are and work together on this.

The issue is it takes significant pressure over time for any real effect to occur here.

Think San Francisco or New York in the 70’s type of ‘urban decay’. [https://amp.theguardian.com/cities/2015/may/18/welcome-to-fe...

A one-off broken window, or never cutting your grass isn’t going to do anything.

Realistically? High central bank rates for awhile does the same thing.

1974 had a fed rate of 10.74%, 1975 5.82%, etc. [https://www.macrotrends.net/2015/fed-funds-rate-historical-c...]

Re: Priced out of home ownership

#678

Post by moralestapia »

orwin wrote: post #161
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'm sorry to recommend you that, but i have experience with homelessness. You have two temporary solutions: - join a group of squatters (hopefully you already know someone) until you get your bearings. The less ideological ones often squat old industrial properties, or long-abandoned houses (its rough in winter, but in Portugal you should be fine). You might meet some Urbex guys, they're nice and always fine with fin…

>join a group of squatters

Lol, it really is true that "civilization" is three meals away from being kaput.

Re: Priced out of home ownership

#679

Post by 015a »

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…

IMO takes like this are problematic. The problem is not enough building. That's it. All the other stuff you said is just noise that confuses people into believing this is some hyper-complicated modern-financial-system problem that's going to end the world due to its intractability. Its not any of that. Its just not enough building.

There are problems which feed into there not being enough building; the biggest one is definitely that property represents a major portion of Americans' investment portfolios, and thus our democratic system is filled with people (and companies) (and their representatives) who are heavily biased toward any decision that will raise property values. But its not that low building causes this; its just NIMBYism. This causes low building; it causes weird municipal rules about density; it causes expensive permitting; etc.

People also say "well, there's not enough land in the place people want to live so of course house prices are insane". Also bullshit. The "place people want to live" changes and expands all the time. Exurbs that were forests 15 years ago are now extremely hot. Why? BECAUSE WE BUILT. That's it. That's all it takes. Build housing. Build parks and sidewalks. Allow cool businesses to open.

Everyone, including and especially local governments, has made this so freakin complicated when its seriously not. Its freakin MBA prediction brain all over again. They're so afraid they don't understand the full problem, or the implications of their decision, that they refuse to act (build) and instead blame the lack of action (building) on intractably large problems like "interest rates" or "blackrock".

Re: Priced out of home ownership

#680

Post by lazide »

rayiner wrote: post #667
xyst wrote: post #659

Earlier quoted context omitted.

It’s a multitude of factors - limited supply in certain (most?) markets, “cheap money”, supply chain factors with certain common building materials, “corporate owned homes”. One thing that has definitely not helped is hostile building codes that prevent density. In some cities in the US, building height is constrained by the nearest single family home. Then there’s the parking minimums for buildings that allocate mor…

> Problem with America is that we think this is 1950 and we can scale by building more deadass suburbs, expensive regional highways, and further strain our limited pool of resources (water, sewage, electrical infra) to support suburban living without any consequences. That doesn’t explain why it’s so hard and expensive to build things. We built those suburbs in the first place when we were much less rich as an econom…

For one - all the easy places to build now have things in the way. Because they had things built there.

In the 50’s these were mostly empty range land, or timberland, or farms, or swamp, or whatever. One (or just a few) owners, low property values, little to no political/environmental resistance - relatively easy to buy someone out and develop.

Now? HOAs, tons of urban zoning rules and environmental rules, thousands of stakeholders for any sizable project.

Which also now means more stakeholders, more political resistance, more BS if you want to increase density there. Or building in not-so-easy places, like steep hillsides, more remote locations, etc.

Most of the existing folks don’t want change. In 1950, especially out west, there essentially were no ‘existing folks’. Even the natives had been wiped out.

And as an economy, we were used to building things at a war economy pace, and had reasons to continue to want to do so.

Now everyone would rather blame someone else (or ensure they get their sizable cut) rather than do anything about it.

As the boomers slowly die out and assets change hands, the momentum will change. Eventually. But we’re talking about a decade plus.

Then it will be the millennials turn to be the ‘bad guys’.

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