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Priced out of home ownership

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Re: Priced out of home ownership

#761

Post by 6510 »

Macha wrote: post #648
seanmcdirmid wrote: post #507

Earlier quoted context omitted.

Ya, and housing used as an investment doesn’t need schools or any real infrastructure, so we could basically build them anywhere. Planning is only needed if people are going to live in them.

Ireland leading up to 2008 basically ended up trying that, with ghost estates that then got knocked. China has also basically done this. It obviously doesn't work as housing, but even its value as an investment is at least nominally tied to the fact that someone, somewhere could value it as a house. Otherwise, eventually it's found the emperor has no clothes and it comes tumbling down.

I had a wonderful idea for this. The trick is to put some truly bizarre requirements on the constructions that when done in volume adds up to an extraordinary place to visit.

For example a single floor dwelling that is the socle of a giant statue depicting a person appropriate for that street. Each must come with a plaque describing who they are and a qr code to a website about them that lives up to some high standard. Think what you will, it is considerably more interesting than "buying" a picture on some blockchain.

Re: Priced out of home ownership

#762

Post by hedora »

dleslie wrote: post #675
cgh wrote: post #441

Earlier quoted context omitted.

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.

I'd guess that many of the unused condos are borderline condemned, and priced way below median. So, it's possible there are ~20,000 condos that need enough work to make repair uneconomical.

Still, it doesn't sound like that'd make much of a dent in Vancouver's housing supply. (Razing them and building higher density buildings might, though.)

Re: Priced out of home ownership

#763

Post by kurthr »

derlvative wrote: post #707
Retric wrote: post #690

Earlier quoted context omitted.

Vacancy rates should be lower where the total inventory increases and people’s ability to predict the market increases. That’s also going to be places people want to live. Consider a city of 10 million people vs 1,000 small towns of 10k people. The variability for demand in those small towns is higher and vacancy rates can’t drop below zero. So some towns hit 0 while others might be 20%. But in a city if some apartme…

This is a lot of mental gymnastics to pretend people don't need places to live. More people are born, hence more housing is needed.

Actually, California population (for example) has fallen by >400k over the last several years. The first falling year was 2019, 2020 saw a small rise (300k, 2022 a fall of ~150k, and 2023 a fall of ~50k.

https://www.macrotrends.net/global-metrics/states/california...

That includes both births/deaths and in/out migration. Population growth rate has been generally falling since 1990 (except for a peak in 2000) and significantly so since the GFC in 2009. However, prices have skyrocketed.

China has overbuilt their population by 10-100million (yes, and there are even more outrageous numbers) homes over the last 10-15 years, and yet prices in Shanghai/ Beijing/ Shenzhen still exceed NYC or SF by 50%. They have a falling population.

https://www.numbeo.com/cost-of-living/city_price_rankings?it...

Re: Priced out of home ownership

#764

Post by tossandthrow »

adra wrote: post #751
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…

Interest rates in Canada have doubled and were only seeing a trickle of investors selling. I do agree that we have way too much investment in finished real estate, which is only hurting consumers trying to get into a market. We've been a lot more strict with ownership transparency and clamping down on short term rentals, which is still too soon to see how significant the effects will be, but the big tldr here being t…

In December there was an expectation that the FED would do 7 interest rate reductions this year. Now we are down to 1 - maybe.

I think a lot of people in the market are still holding on with a strong expectation that the interest rates will go down.

Personally, I think high interest rate environments are better for most people - it compresses asset prices and adds more value to a salary. But it will take some years for that compressions to kick in again.

Re: Priced out of home ownership

#765

Post by bobthepanda »

kurthr wrote: post #763
derlvative wrote: post #707

Earlier quoted context omitted.

This is a lot of mental gymnastics to pretend people don't need places to live. More people are born, hence more housing is needed.

Actually, California population (for example) has fallen by >400k over the last several years. The first falling year was 2019, 2020 saw a small rise ( 300k, 2022 a fall of ~150k, and 2023 a fall of ~50k. https://www.macrotrends.net/global-metrics/states/california... That includes both births/deaths and in/out migration. Population growth rate has been generally falling since 1990 (except for a peak in 2000) and sig…

China has the confounding issue where it has both poor social security systems and a mistrusted, dysfunctional stock market and financial system, so everyone shoves money into real estate for retirement.

This is not even a new problem. The imperial landed gentry was so named because bureaucrats would shovel their money into land.

Re: Priced out of home ownership

#766

Post by globular-toast »

rahimnathwani wrote: post #253
lkdfjlkdfjlg wrote: post #242

Earlier quoted context omitted.

> Why should a landlord be unable to deduct business expenses from revenue before calculating taxable profit, when all other businesses can? I think you nailed it. This is effectively the government saying "renting is not a business". Think about it. The ability to "deduct expenses" is one of the characteristics of businesses. Individuals also can't deduct rent, food etc from their taxes.

This is effectively the government saying "renting is not a business". Yes, but only if you're an individual landlord. If you register a company and buy the property through that, the normal rules apply and all interest expense is deductible. Of course, the mortgage might be harder to get or more expensive, as it's no longer secured on an individual's assets and future income.

Isn't a mortgage secured on the asset itself (the house)?

Re: Priced out of home ownership

#767

Post by EasyMark »

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…

It's more likely a correction on interest rates combined with lack of supply. It will even out, it's not a failure of the system. If more houses are build then value gets diluted, private capital can't keep buying up all the "extra" supply. Rates will also need to drop and more people can buy, as people include "that payment is more than I can afford" every bit as much as "this house costs $X"

Re: Priced out of home ownership

#768

Post by the_mar »

ch4s3 wrote: post #752
materielle wrote: post #726

Earlier quoted context omitted.

Why is the vacancy rate so low in desirable neighborhoods? Is it that there isn’t enough housing period, in the entire country. Or is it is people and investments abandoning rural areas in favor of a handful of city neighborhoods? I’m also curious if those vacancy rates can be / have incentive to be gamed by the homeowners, or otherwise don’t paint a very accurate picture. I lived in a wealthy part of NYC for a while…

> Only maybe like 5 out of 100s of apartments consistently had someone living in them. I would be highly surprised if this were true. I lived in NYC for year and the myth of tons of empty units is pernicious and just won't die. There has been a TON of research on this topic and it all points to there being a huge shortage of housing in the city. As a percentage of total housing stock vacant units make up a fraction o…

Anecdotally, my apartment building has 0% vacancy rate. And a newer building across the street has at least 10 apartments vacant for the most of the year.

Anecdotally, i know quite a few boomers that own multiple properties (>3) in manhattan, some of which they rent some of which they keep vacant for when they want to come to the city I feel like at least some % of apartments in the city are visibly vacant most of the time because they are just part time homes for the wealthy.

Re: Priced out of home ownership

#769

Post by seanmcdirmid »

Aunche wrote: post #721
seanmcdirmid wrote: post #500

Earlier 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.

The difference is that China had a housing bubble. After it popped, housing prices started plummeting. In the US, housing is just expensive. Given the current supply and demand, there isn't a good reason why the price should be lower.

> After it popped, housing prices started plummeting.

Prices haven't plummeted in China. Sales volume has seized since the red families control the real estate agencies. They have added more incentives, like easier access to hukou, and have eliminated limits on how many homes you can buy.

Re: Priced out of home ownership

#770

Post by JakaJancar »

materielle wrote: post #726
dleslie wrote: post #670

Earlier quoted context omitted.

Under utilization can be measured as a factor of the vacancy rate; which influences both home pricing and rental pricing. Here in Canada, the desirable places to live all have relatively low vacancy rates for residential housing, and have for quite some time. Ie, it's rare to see cities with vacancy rates for apartments exceeding 3%, let alone a healthy 5%.[0] The CMHC estimates that by 2030 we will need 3.5M additio…

Why is the vacancy rate so low in desirable neighborhoods? Is it that there isn’t enough housing period, in the entire country. Or is it is people and investments abandoning rural areas in favor of a handful of city neighborhoods? I’m also curious if those vacancy rates can be / have incentive to be gamed by the homeowners, or otherwise don’t paint a very accurate picture. I lived in a wealthy part of NYC for a while…

I lived in the West Village for the last 6 years, also facing the courtyard and maybe seeing 20 apts, pretty much all consistently utilized

¯\_(ツ)_/¯

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