Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Priced out of home ownership

bbc.co.uk

Post reply on HN
Print view View original

851–860 of 1001 posts

Re: Priced out of home ownership

#851

Post by CrispyKerosene »

rndmize wrote: post #796
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…

No, lack of building _is_ the main problem. It doesn't matter if the demand for homes is "artificial" or not - the easiest solution is to build more. > 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? This is something I've wondered, and I'm of the opinion there's two reasons that are rarely discussed. One i…

I think you might be missing the point of the poster. While building more might in the reduce housing stress in the next few decades, rapid building for the sake of feeding the investor market is pouring gas on the fire.

This is where discussing the housing problem becomes challenging. Half of us want to burn the whole system down and take housing back to the basic human need it is, while the other half want to work with the system we have.

Its tough

Re: Priced out of home ownership

#852

Post by dclowd9901 »

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…

> In my view this is symptomatic of a more fundamental issue - global asset price inflation driven by a broken financial system (i.e. a system being artificially pumped up with cheap credit).

I've been crowing on this since the 2008 crash. The cycle is this:

1. A person has a job, but can't afford things

2. They get credit to buy the things they want, in lieu of demanding better pay

3. Everyone does this, so demand goes up and prices go up

4. The value of their dollar goes down

5. Go to 1.

Consumer credit has _broken_ money. Broken it. We've seen this in housing prices and student loans, and now that we have online checkout buttons that say "you can have this for $17/mo!", we're starting to see it in stock-and-trade consumer goods even more now.

We have to -- have to -- eliminate consumer credit if we ever want to give people a fair shake at maintaining the value of their money and purchasing things. Otherwise, prices will be determined by people who are dumbest with their money.

Re: Priced out of home ownership

#853

Post by CrispyKerosene »

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…

Desirable neighborhoods in Canada and US typically resemble pre-automobile orientated design type neighborhoods. These are on short supply.

So while there might be enough physical houses around the country/province/city, what makes a place desirable to live extends far beyond the walls of your home.

Re: Priced out of home ownership

#854

Post by throwaway1105q »

setgree wrote: post #838
xenadu02 wrote: post #822

Earlier quoted context omitted.

People really want there to be "one reason" for skyrocketing housing prices. Real life is not so accommodating. The problem is multi-faceted. Is there asset price inflation due to cheap money? Yes. Have foreign nationals been parking their cash in real estate in certain western countries? Yes. Has restrictive zoning and NIMBY-ism reduced the incoming supply of new homes? Yes. Multiple things can be true at the same t…

Multi-faceted and interrelated: a lot of housing would become a less attractive investment vehicle if near-substitutes were more plentiful. An overseas investor buying a Vancouver condo assumes that the asset will have high resale value (in addition to its use value as, e.g., a rental or airbnb). But in a saner world, housing would depreciate in value over time in proportion to its use and maintenance, like other dur…

That would make sense in a world where the surrounding location is completely static, but generally as a town/city grows it's much more desirable - more work for better wages, more business opportunities, economies of scale, better education... A world that doesn't respond to that with increasing price doesn't seem sane. Imagine that you start with a house in the middle of nothing. 20 years later there is a major city around you - and the house should be cheaper than it was when there was nothing? What about new housing around your house, should it have the same nearly zero price too? What even is depreciation in case of housing - my grandmother lives in a 120 year old house and I'm pretty sure my grandchildren will live there too.

Re: Priced out of home ownership

#855

Post by Sohcahtoa82 »

nightski wrote: post #727
NoGravitas wrote: post #719

Earlier quoted context omitted.

Infotech will let you work anywhere, but you still need fixed infrastructure that is only possible to efficiently provide in a centralized way. Even suburbs are a net economic drain given their infrastructure costs, never mind dispersed rural living.

There's nothing efficient about big cities. Hours of commuting by millions of people every day. Tons of excess and waste. You become disconnected from the source of your food which has to be shipped in. Technology is a lot more than InfoTech. It includes core engineering and infrastructure.

> There's nothing efficient about big cities. Hours of commuting by millions of people every day.

You have it backwards. Density makes mass transit feasible. You want to talk about commute times, spreading everyone out is going to magnify that.

Cities are efficient. At least, they can be. Busses and trains/subways work a hell of a lot better in urban cores than suburbs, and are effectively worthless from an efficient standpoint for moving individual people in a rural environment.

Re: Priced out of home ownership

#857

Post by ben_w »

tossandthrow wrote: post #849
ben_w wrote: post #815

Earlier quoted context omitted.

> EUR 400k for a newly build home in the greater Berlin area seems like extremely affordable in my opinion. I was picking the absolute lowest cost for an example, so on one hand it should have. On the other hand, what's that in "years of average income", and does it seem reasonable that half of this is the land itself?

I think the rule of thumb is that you should not buy at more than 4x household income. I know that the salaries in Berlin are in the lower end, but 100k EUR a year in household income seems like a reasonable expectation for people wanting to live in attractive areas.

The median pre-tax household income in Berlin is €43,572, not everyone gets to be on software engineering pay scales: https://allaboutberlin.com/guides/salaries-in-germany

But even if the median income were €100k, the €400k level was around the cheapest I could find that you could actually live in and wasn't a weekend house, or a reverse-mortgage you'd only get to use when the seller died, or a building opportunity with no land, or they're rented out and as Germany has fantastic protection for tenants you are not going to move in etc.

If the standard is 4 years, even then you'd be excluding 50% of the households from ownership at €100k/year and €400k minimum prices. As is, €43k/year is closer to 9.5 years income still not being enough for 50% of households.

Re: Priced out of home ownership

#858

Post by tossandthrow »

deergomoo wrote: post #243
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?

No-one can kick you out of your own home because they want to rent to someone they can charge more. No-one can tell you you can’t change the wallpaper in your own home, or remodel the bathroom, or get a dog. Not everything is a purely financial decision. A home is primarily a place to live, not an investment opportunity.

The parent commenter spoke explicitly about it as a financial decision. Your counter comment directly contradicts their assumptions (financial decision), which makes it inappropriate.

Re: Priced out of home ownership

#859

Post by tossandthrow »

arp242 wrote: post #291
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?

People just want a house to live in. That's it. They don't want a "broad based index fund" or investments or anything else. They just want a house to live in. With all the stability that comes with it. And then spend their free time doing more useful things. Also it doesn't scale; we can't all be investing all the time. This kind of reductionism where everything boils down to financials is exactly how we ended up in…

Parent commenter is talking about a financial decision.

You can have a place to live without buying.

Your comment is malplaced.

Re: Priced out of home ownership

#860

Post by hot_gril »

munksbeer wrote: post #629
neilwilson wrote: post #336

Earlier quoted context omitted.

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.

Yeah, our current "high interest rates" are still artificially lowered by the Fed.
Post reply on HN