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Priced out of home ownership

bbc.co.uk

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Re: Priced out of home ownership

#891

Post by randomdata »

Rury wrote: post #613
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…

Yeah, too many people think supply/demand is all there is to prices, when that is just economics 101. What many people seem to not even know, is that the theory only holds true under competitive free market conditions and falls apart under captive/uncompetitive markets. Many also assume trade volume is necessarily representative of a supply shortage, when that isn't always the case, as "supply" and "supply for sale…

> What many people seem to not even know, is that the theory only holds true under competitive free market conditions and falls apart under captive/uncompetitive markets.

Why would the law of supply and demand fall apart under captive/uncompetitive markets? A captive or uncompetitive market may impact the quantity of a good or service available and/or the quantity of a good or service willing to be purchased at a given point in time, but that doesn't change the law.

> Many also assume trade volume is necessarily representative of a supply shortage, when that isn't always the case, as "supply" and "supply for sale" are two different things.

Huh? Supply is characterized by being "for sale". Of course, a shortage occurs when price is prevented from rising. Housing certainly doesn't have that problem. The so-called "housing shortage" is really an issue of latent demand – people desire homeownership but can't afford it.

Re: Priced out of home ownership

#892

Post by freedrock87 »

throwaway1105q wrote: post #854
setgree wrote: post #838

Earlier quoted context omitted.

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 cit…

Maintaining houses cost time (aka money) and money.

Re: Priced out of home ownership

#893

Post by illegalmemory »

kylehotchkiss wrote: post #481
nasmorn wrote: post #289

Earlier quoted context omitted.

Also they build with what is almost slave labor.

Blame the nearby countries providing no jobs, no education, and no future for these laborers instead. Also don’t forget the hundreds of thousands of people from the exact same countries who gain respectable middle class, stable jobs in UAE that their home countries don’t provide. I’m not here to defend every decision that UAE has made but they’ve done a lot of good for people who come from countries with unspeakably…

What you are saying is that slavery is not bad because they get to eat now.

Re: Priced out of home ownership

#894

Post by randomdata »

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

Of course. Remember, homebuilding continues to be incredibly labour intensive. Meanwhile, all of those countries have enjoyed "full employment" for many, many years. Which means that workers have all kinds of job options.

In other words, you can't build without people. Ask yourself, why would the people choose construction? Wouldn't sitting at a comfy desk programming computers all day be more desirable? The small few who enjoy it can’t keep up.

Do you work in construction as a career? If no, why not? What would it take to get you to start building houses? Higher compensation than other jobs, perhaps? But guess what high compensation brings...

Re: Priced out of home ownership

#895

Post by banannaise »

ipsento606 wrote: post #744
banannaise wrote: post #724

Earlier quoted context omitted.

> 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…

You are taking as an assumption the very thing we are currently questioning - does lack of supply actually account for the increase in housing prices?

Lack of supply would cause prices to rise - but so would cartel behavior on the part of those who control that supply. Housing of the type necessary for relatively low-income individuals, where the location must be close to jobs (see above), is typically controlled by a set of entities who exhibit cartel behavior in how they price the rent.

Re: Priced out of home ownership

#896

Post by throwaway1105q »

freedrock87 wrote: post #892
throwaway1105q wrote: post #854

Earlier quoted context omitted.

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 cit…

Maintaining houses cost time (aka money) and money.

Not so much it'd be visible in the price - maybe 5-10% up or down, more pronounced in remote locations. The location is the important factor. Realtors work with square area pricing set for entire towns or municipalities.

Re: Priced out of home ownership

#897

Post by DenisM »

wodenokoto wrote: post #723
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 is a question about the area of central locations grows much slower than the amount of people who wants to live in a central location. Dubai is expanding like there is no tomorrow, and the price of down town and marina just keeps increasing, regardless of how many new high rise areas the emirate undertakes. China has hundreds of literally empty cities, yet people are being priced out of living in Beijing.…

The empty cities are interesting. People don’t want to live there because there are no jobs and no services. There are no jobs or services because there are no people. Sounds like an opportunity for the government to step in and create employment, e.g. move a big military contractor there to “bootstrap” the city.

Re: Priced out of home ownership

#898

Post by AnthonyMouse »

ericmay wrote: post #758
AnthonyMouse wrote: post #572

Earlier quoted context omitted.

> Total number of dwellings per thousand inhabitants, 2022 and 2011 The issue here is that demand shifts regionally over time. Dwelling units in Detroit don't satisfy demand in San Francisco. The result is that you continually have to increase supply in the places demand currently is. To keep prices flat, the number of units per thousand inhabitants has to increase over time, because the number of empty units in area…

> Dwelling units in Detroit don't satisfy demand in San Francisco. They do help though. Individuals need to realize they can’t afford to live in a place like California and have to give up that luxury if they want more affordable housing arrangements.

> They do help though. Individuals need to realize they can’t afford to live in a place like California and have to give up that luxury if they want more affordable housing arrangements.

But this is no solution at all because everybody knows that. People want to live in California because there are jobs in California and not in Mississippi. In Mississippi you pay $100 less for a house and then make $200 less in income, so who is going to do that?

To fix this you either need to make housing cost less in California or make jobs pay more in Mississippi. But if anybody knew how to do the second one they'd be doing it already, whereas we do know how to do the first one -- build more housing.

Re: Priced out of home ownership

#899

Post by MrMan »

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.

[dead]

Re: Priced out of home ownership

#900

Post by foobarkey »

As long as people are willing to pay “anything” for their home - prices will always be near the max that they are able to afford.

To be honest I don’t think capitalism is able to fix this problem, the only solution I see if government takes over and subsidizes housing enough from taxes to make it more affordable for salaried employees (needs to come with strings attached so the free market does not turn a quick buck reselling)

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