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Priced out of home ownership

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Re: Priced out of home ownership

#871

Post by rndmize »

mattgibson wrote: post #808
rndmize wrote: post #796

Earlier quoted context omitted.

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…

You really need to provide data to make that assertion. Shortages of buildings are not the only reason that property prices can be high. Properties are made up of a building and a plot of land that it's attached to. Whilst we can nake more buildings, we can't make more land, so the land in a given location is by definition going to be in a permanent state of shortage. If more poeple want to live in that location OR (…

> Shortages of buildings are not the only reason that property prices can be high.

It pretty much is - everything else is window dressing. Pretty much every single city in China is 3-10x more dense than any area in the US, so lack of land is a reason I find continually uncompelling. Our lack of density, zoning practices, NIMBY attitudes and car dependency all contribute to this, with the result being a lack of construction.

Tokyo has been and continues to be affordable for anyone who wants to live there by building: https://www.nytimes.com/2023/09/11/opinion/editorials/tokyo-...

Here's a grad student on tiktok who does good, well-sourced analysis on this front (he has an entire playlist on the issue of vacancy rates given how frequently it comes up): https://www.tiktok.com/@divasunglasses?lang=en

Article on zoning law changes in CA and how municipalities have put out estimates for how much they should build and then consistently, for decades, not even come close to meeting them: https://darrellowens.substack.com/p/ca-cities-to-lose-all-zo...

There's endless amounts of info on this front - look up strongtowns, YIMBY, parking minimums and associated issues (https://www.youtube.com/watch?v=OUNXFHpUhu8), japanese vs. american zoning policy (https://urbankchoze.blogspot.com/2014/04/japanese-zoning.htm...)...

Re: Priced out of home ownership

#872

Post by Sohcahtoa82 »

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?

It really depends what the rent-to-mortgage ratio is, which apparently varies a lot by area.

Where I live, rents are often about equivalent to the mortgage + property taxes, plus a little more. In other words, in the house I live in right now, my mortgage + property tax is about $2,500/month. If I were to rent it out, I could likely get $2,600/month for it, possibly up to $3,000.

In this scenario, if you plan on living somewhere permanently, there's not a single way to do the math that it works out that renting ends up being the better choice. Not only do you pay more now, but rent nearly always goes up.

> but there doesn’t seem to be a clear financial advantage to home ownership

Just the simple fact that money paid to rent goes into a black hole whereas money paid towards a mortgage that builds equity should be a clear financial advantage to home ownership.

Opting to rent is insanely short-sighted. Like, even if I could rent the house I'm in right now for $2,000/month ($500 less than the monthly cost of buying), over the next 10+ years, rent will very likely go up over time. And again, that money is just being burnt. When you buy, eventually, you don't have a mortgage anymore.

I think the only way renting ends up working out better is if you live in some crazy place where a mortage+tax is double the monthly cost of renting.

Re: Priced out of home ownership

#873

Post by kerhackernews »

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…

>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?

They all do though, for various reasons.

Re: Priced out of home ownership

#874

Post by selfmodruntime »

xenadu02 wrote: post #822
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…

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…

You conveniently forgot immigration. Canada alone has added 500.000 people to their populace since the beginning of the year.

Re: Priced out of home ownership

#875

Post by esel2k »

hombre_fatal wrote: post #183
esel2k wrote: post #149

I am not an economist but if we would treat house ownership something that is beneficial for the whole society (less traffic from commuters, less homeless etc) and remove the speculations/foreign investments around housing? Why not apply the following: - every house not used for primary living place is highly taxed (removing all speculative ownership) - charge foreign investors heavily (australia will do this soon) -…

Are speculators the problem is it the fact that housing prices are always expected to go up due to such limited supply? Instead of targeting a symptom, like speculative investment, why not target the root problem of prices always going up so that people can afford housing?

But then what is your description of the root of the problem?

At least in cities or places with a trainstation here the demand versus supply is out of band. What do you want to do against growing population and limited space?

Re: Priced out of home ownership

#876

Post by esel2k »

ricardobeat wrote: post #207
esel2k wrote: post #149

I am not an economist but if we would treat house ownership something that is beneficial for the whole society (less traffic from commuters, less homeless etc) and remove the speculations/foreign investments around housing? Why not apply the following: - every house not used for primary living place is highly taxed (removing all speculative ownership) - charge foreign investors heavily (australia will do this soon) -…

This is partially implemented in the Netherlands, most new houses are move-in only, a second mortgage requires 40% downpayment. Rules were updated recently to include an extra 300k homes in the rent control scheme. People I know who are landlords are trying to sell. And yet, supply is so constrained that house prices continue to rise. Either cities need to stop growing, or build a lot more housing.

Interesting but I don’t think having 40% downpayment solving the issue because banks, speculators and foreign investors will have the money to exclude normal buyers.

I am in Switzerland an 20% downpayment is a must. Secondly you can only take money out of your retirement scheme for a move-in house. But still supply is highly limited making prices explode. Most people I know have about 500k to 1 Mio in debt (about the same in Euro).

As rent prices seem to go up as well the problem aggravates for low income people.

What else is Netherlands thinking about doing?

Re: Priced out of home ownership

#877

Post by eszed »

ffsm8 wrote: post #864
ethbr1 wrote: post #833

Earlier quoted context omitted.

Exactly! And important to recognize the interest groups behind preventing progress on each. Fixing the issue has been stymied for too long by each pointing at the others and saying "They're the real problem!" to justify inaction / rolling back fixes on their pet interest. All need to be addressed.

These aren't all issues though. Another contributing factor is that home/lands ownership can be inherited. That's going to be the biggest contributer as time goes on (not right now though), as eventually all desired land will have been bought by what amounts to an oligarchy. Honestly, land/homes should never be inheritable, and companies should never be able to own land altogether. Not that this would ever happen. Th…

>land/homes should never be inheritable

Eh, nah. But, there should be inheritance taxes set at a level which prevents the formation of a "landed gentry". Unfortunately, the issue has been demogogued to the point that middle-class people (who won't have anywhere near the assets to be taxed, as in not by an order of magnitude) treat the idea as anathema.

Re: Priced out of home ownership

#878

Post by QuarterReptile »

ethbr1 wrote: post #827
QuarterReptile wrote: post #820

Earlier quoted context omitted.

>Cheap credit causes an increase in demand. This is not demand for homes but additional 'artificial' demand for properties as investments. Think short term rentals, second homes, land banked properties, etc. By definition, only investment properties can be underutilised - owner occupied homes are occupied! So in an environment that encourages property investment you will see more underutilisation. An important nitpic…

That's comingling a few things, because a lot of the privileges around holding a home as an asset don't extend to investment properties. E.g. the easy availability of competitive mortgages and individual tax breaks. Personally, I think we should lean into that -- make single family homes completely unattractive as an investment. Rental units are more debatable, because of the density argument, but I think we should p…

I didn't mean even tax advantages or favorable financing. The heart of the issue is that we have a national policy of not letting housing prices go down because that would crush too many people's equity and with it their financial stability. The longer it goes, the more we ratchet up the tension between affordable housing and housing as investment.

There's probably a lot to be said about the secondary market for conforming mortgages, but I'm not the knowledgeable person to do so.

Re: Priced out of home ownership

#879

Post by lotsoweiners »

kerkeslager wrote: post #741
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.

I think you’re missing his point that yelling the same ideas into the void (internet) ad nauseam doesn’t really help solve anything or implement these solutions. Each one of the items the poster listed are very difficult to implement and just fixing one thing isn’t going to move the needle noticeably.

Re: Priced out of home ownership

#880

Post by AnimalMuppet »

eszed wrote: post #877
ffsm8 wrote: post #864

Earlier quoted context omitted.

These aren't all issues though. Another contributing factor is that home/lands ownership can be inherited. That's going to be the biggest contributer as time goes on (not right now though), as eventually all desired land will have been bought by what amounts to an oligarchy. Honestly, land/homes should never be inheritable, and companies should never be able to own land altogether. Not that this would ever happen. Th…

>land/homes should never be inheritable Eh, nah. But , there should be inheritance taxes set at a level which prevents the formation of a "landed gentry". Unfortunately, the issue has been demogogued to the point that middle-class people (who won't have anywhere near the assets to be taxed, as in not by an order of magnitude) treat the idea as anathema.

"Bracket creep".

The middle class is afraid of taxes that are "for the rich" being extended to tax them. And not without some reason - income tax was sold as "only for the rich".

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