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Priced out of home ownership

bbc.co.uk

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Re: Priced out of home ownership

#741

Post by kerkeslager »

apwell23 wrote: post #714

all housing posts on HN can be summarized with this without reading any of the comments all housing posts have the following discussions 1. housing shouldn't be an investment 2. 'local democracy' always turns into nimby 3. something about gentrification 4. something about govt incentives/disincentives: don't give tax breaks for homeowners, tax second home ownership ect . 5. something about airbnb 6. some comparisons…

The fact that your response to real solutions is to list them dismissively underscores why we need to continue to say these things.

Re: Priced out of home ownership

#742

Post by rybosworld »

The housing market has gone through several booms and busts in the U.S. I'll restrict to U.S. viewpoint since it's the only country I am educated on this topic. In every single case, the root cause was unchecked financial speculation.

The most major busts by year:

1837 - caused by land speculation, driven by the gold rush

1873 - caused by land speculation, driven by railroad companies and their investors

1929 - caused by a stock market bubble

2008 - caused by widespread mortgage fraud and speculation on the housing market

Re: Priced out of home ownership

#743

Post by oooyay »

thelastgallon wrote: post #495
lr1970 wrote: post #181

Earlier quoted context omitted.

> It perplexes me, and the rest of our neighborhood, how someone can float a mortgage, much less an investment mortgage, without a renter. In the USA it is happening all the time because, surprisingly, landlords have little skin in the the game. LLC is the name of the game. Each investment property is "owned" by its own LLC that bares 100% of risks and liabilities associated with the property and shields the landlord…

No bank loans 100%, investment homes require 25% downpayment.

Non-sequitur to this but VA loans do. That said, VA loans are watched like a hawk for this. It's considered fraud if the loan is not on your primary residence and you cannot rent any portion of it.

Re: Priced out of home ownership

#744

Post by ipsento606 »

banannaise wrote: post #724
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…

> if interest rates being high was making housing unaffordable, one would expect prices to be down. I think you have to be careful with the definition of "unaffordable". Housing, at this moment, is unaffordable in the sense that the cost of housing squeezes many people's discretionary budget, savings, and even sometimes the budget for necessities. It is not unaffordable in the sense that (most) people do have enough…

> Housing is an inelastic good - particularly for demographics who have limited access to transportation and therefore need to live very close to where the jobs are. The price increases until it consumes all the money available to pay for it.

Housing is not rising in price because it is an inelastic good. Housing is rising in price because the growth in the supply of housing is less than the growth in the demand for housing.

Indeed, the very fact that housing has inelastic demand means that it is particularly susceptible to price reductions when supply is higher than demand.

Re: Priced out of home ownership

#745

Post by kerkeslager »

screye wrote: post #304
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.

Both are band aids for the real problem. Housing can't both be an investment and a basic need. You need to pick one or find an opinionated middle ground. If housing is an investment, then remove all protections and open up the supply. No height regulations, no minum parking regulations, no mandatory HOAs. No moratoriams or legal protections when loans default. If housing is a need, then regulate it like a limited res…

[flagged]

Re: Priced out of home ownership

#746

Post by csomar »

anthonypasq wrote: post #713
pif wrote: post #696

A utopic solution would be to learn, at last, how to have a thriving economy without increasing megalopolis. Housing prices are unaffordable in big cities, while abandoned properties are rotting in the countryside everywhere. It's time we start spreading the economy rather than concentrating the people.

cities are fundamentally more efficient and just a natural byproduct of the way capitalism allocates money and people.

And you are basing this on what evidence. Cities spread disease either infectious or by pollution. If a job can be done remotely, the company should not only allow it but it should be the only way to do it.

Many jobs can be done remotely today and this will move annex jobs with them. Cities will remain central hubs but this will reduce the pressure and demand.

Re: Priced out of home ownership

#747

Post by bojangleslover »

Factors boosting demand

-Cheap credit with ever-decreasing lending standards (not like 2006 though, not yet) -Population growth (whether immigration or births — does not make a difference, though babies can't buy houses) -"Pent up" demand, people who wanted to move during COVID but did not because of COVID (somehow), who now do want to move

Factors restricting supply

-Building -Zoning -Most of all: nobody wants to leave their 3% rate, and there is about 11T of outstanding mortgage debt, most of which at the 2020-2022 low rates

Factors inflating prices

-(Mostly) obsolete realtors charging 6% in a world with Zillow -Orgy of money-printing

Re: Priced out of home ownership

#748

Post by moduspol »

ben_w wrote: post #652
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…

I think it's a different problem entirely. I've been looking at getting a house built, and that starts at about €200k*, but the land in Berlin is at least another €200k on top of that (and usually more). If I was willing to live in the back end of nowhere, I can get the land for almost nothing, halving the total cost. But then I'd be living in the back end of nowhere, and turning that into an interesting town (let al…

I think a lot of it is this. A lot of our grandparents literally built their own houses, and while that's probably easier than ever nowadays, it doesn't solve the infrastructure problem. I won't save much money doing that if getting a road / electricity / water / Internet / sewer to the property will cost as much as (or more than) the house itself.

IMO it's yet another network effect caused by fewer people being willing to work in these kinds of fields, and a decreasing birth rate. Infrastructure inherently requires maintenance, so as it increases, so does the amount of people required to maintain it. Yet we have fewer and fewer people to do it, so adding new stuff just becomes unreasonably expensive.

Re: Priced out of home ownership

#749

Post by superkuh »

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?

The issue is that you are approaching this from a financialization perspective. The point of homes is not to be an investment. The point of homes is to provide shelter and a place to live.

Re: Priced out of home ownership

#750

Post by 6510 »

digbybk wrote: post #472
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…

> 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…

People able to buy lots of properties as investment won't allow an increased supply as it ruins their investment. Restrictions on building is just a service one can buy.
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