[HN Gopher] Home Price to Income Ratio
___________________________________________________________________
Home Price to Income Ratio
Author : hncurious
Score : 280 points
Date : 2021-09-20 14:32 UTC (8 hours ago)
(HTM) web link (www.longtermtrends.net)
(TXT) w3m dump (www.longtermtrends.net)
| jandrese wrote:
| How much of this is a result of our "don't tax the rich" policies
| that created a staggering amount of wealth at the top that has
| nowhere else to go? So many ultra rich investors are looking for
| something, anything, to invest in. Plus there is the feedback
| loop of massive growth you get as the bubble inflates.
|
| Is this a direct result of our fiscal policy? Have we destabilize
| the economy in order to create the richest muilti-billionaires?
| flyinglizard wrote:
| This is happening outside of the USA, in countries with more
| progressive taxation too. Canada, UK, Israel - all with much
| worse house price to income ratio compared to the USA.
|
| These homes are not owned by billionaires either. It's an asset
| class that's very broadly distributed by its definition; most
| people own their homes.
|
| I think it's mostly driven by macroeconomics. Near zero
| interest, population growth (organic or through immigration)
| and historical real estate appreciation all fuel this trend.
| jandrese wrote:
| It doesn't matter so much if a country is taxing their own
| rich if they allow rich people from other countries to buy
| real estate.
| flyinglizard wrote:
| I've never seen any data showing that housing bubbles are
| attributed to "the rich". The housing market is made of
| tens of millions of individual home owners, not some moguls
| cornering the market.
| jandrese wrote:
| The term you want to look for is "investment properties",
| or in some cases "foreign investment".
| flyinglizard wrote:
| "Rich people" investment properties are a negligible
| share of the total housing market so this theory most
| often used as a scapegoat by the "eat the rich" crowd.
|
| If anything, more real estate investment would create
| more housing stock. Someone's not building enough.
| munk-a wrote:
| I don't actually think new housing developments are a
| really high RoR and building your own house has a high
| barrier of being able to support and house yourself while
| floating the full value of the house you're trying to
| build - for that reason new home owners almost never buy
| their own house. Additionally arguably the most valuable
| part of owning a home is the appreciating value of land -
| and land most steadily appreciates in stable communities
| (where a plant closure won't suddenly tank the market)
| and the best of these are urban centers where the market
| is extremely stable. All that is a long way to say that
| investors specifically want to buy that condo that's
| right next to your office and they're much less
| interested in investing in some development out in the
| boonies that will only gradually accrue value (and be
| impossible to exit for the year or so that the units are
| actually under construction).
|
| Lastly, we've got NIMBY - this is the source of nearly
| all our housing woes because if you could buy up all
| those single homes in SF and convert them to condo towers
| we'd solve the housing crisis overnight - but that would
| "ruin the neighborhood" and, more importantly, depreciate
| the value of all those inflated house prices - and that's
| why all the neighborhood councils will continuously vote
| to perpetuate the shortage of housing.
|
| People do want to build more housing - but people who own
| the land are stubborn assholes. When it happens that an
| investor manages to secure a full block of single family
| homes in a downtown core they'll almost always try and
| convert it to condos - but then they've got to fight
| against the NIMBYism and they'll usually lose because as
| every 80's movie ever taught us: "The evil developer is
| trying to tear down the community center - we've got to
| stick up for the neighborhood and win that tournament!"
| pishpash wrote:
| Leveraged asset buyers have an influence when inventory
| is so low.
| epistasis wrote:
| Agreed, but the fundamental problem is that inventory is
| so low. Super low inventory and vacancy rates cause far
| more problems in addition to prices being set by a
| wealthier percentile.
| flyinglizard wrote:
| Ironically the inventory would have been higher if more
| rich people invested in real estate projects, instead of
| stocks and bonds.
| epistasis wrote:
| I don't think the bottleneck for new housing is
| investment capital, it's mostly about getting permitted
| to build, and also getting enough labor. There's a fairly
| big shortage in the trades, as the boom-bust-cycle has
| forced more experienced people out, and there hasn't been
| many new people getting trained.
|
| Also, a lot of the opportunity for large scale projects
| is gone; building a large tract of homes in the Bay Area
| means building super-exurban in places like Tracy.
| Projects like the Vallco mall replacement in Cupertino
| take a decade+, and what ends up getting permitted will
| not usually look anything like the initial plans, or
| what's technically allowed by law. (This is changing
| slightly in California in that by adding enough below-
| market-rate deed restricted units, you can build
| according to code and zoning without greedy neighbors
| vetoing the project. )
| munk-a wrote:
| It might be helpful to take a deeper look at the housing
| markets of Toronto and Vancouver - both are urban centers
| with a lot of employment opportunities and homes owned by
| regular folks - but they've also both been ravaged by a
| plethora of investment properties which, in a self-
| fulfilling manner, are driving demand through the roof
| thus justifying more investment.
| flyinglizard wrote:
| If you asked me what keeps NYC real estate prices up, I'd
| say "rich people", but the dynamics of distinctive urban
| centers such as Toronto, London, San Francisco and others
| don't apply at all on a country level. It's not the same
| types of assets, buyers or price levels.
|
| So yes Toronto might have been influenced by rich Chinese
| buying properties, but does that extend to Canada as a
| whole?
| exporectomy wrote:
| It happens in countries which don't allow that too.
| fake-news wrote:
| How can we eat the rich when we have no kitchens?
|
| Can't blame the capitalists for self-preservation.
| taurath wrote:
| The amount of private equity in housing is really underreported
| I think - still the vast majority of people owning second homes
| or additional property are doing it for investments, but there
| is nothing stopping an "uber for housing" where they use VC
| money to buy up massive amounts of properties and influence
| pricing. I believe this is one of Zillow's primary models.
|
| My take is that we need to treat housing as an actual human
| need, and there should be penalties for buying houses to rent
| or for investment purposes outside of ones primary residence.
| That sort of exists in the mortgage interest tax deduction but
| with rates near 0 that's become far far less effective.
| jurassic wrote:
| > there should be penalties for buying houses to rent or for
| investment purposes outside of ones primary residence.
|
| There are lots of people who don't want to own a home (e.g.
| who value the mobility/flexibility of renting), and people
| who are unable to afford the fully loaded homeownership
| costs. In these rent-vs-mortgage discussions people often
| overlook the non-mortgage homeownership costs which can be
| very significant and hard to predict. I say this as a person
| who found myself needing an unexpected $25k+ roof replacement
| in my first year of homeownership.
|
| I suspect living standards for the bottom quintile would
| actually fall if they had to maintain their own homes. E.g.
| how are the people who can't put together $400 in an
| emergency, the minimum wage employees living hand to mouth,
| etc going to be able to afford to replace an unexpected
| leaking roof (a $10k+ problem) or a broken water heater (a
| $5k problem) or refrigerator (a $500+ problem)? A lot of
| basic amenities are legally mandated for landlords to provide
| that I think low-income tenants would not be able to maintain
| on their own. A landlord with a larger net worth is better
| able to absorb these cashflow problems and keep the property
| in a healthy state.
| rory wrote:
| > That sort of exists in the mortgage interest tax deduction
| but with rates near 0 that's become far far less effective.
|
| FYI, mortgage interest on an investment property is also tax
| deductible. In fact, there's no limit on it like there is on
| your own personal-use home. It's basically treated like a
| business expense (which, arguably, it is).
| epistasis wrote:
| I think the problem is as much in the ownership as it is in
| anything else.
|
| In China, where housing costs are skyrocketing as well, there
| are protests when enough housing is built to start to make it
| affordable again.
|
| Putting the majority of a person's life savings into their
| house is, in the end, a pretty bad idea.
| xibalba wrote:
| Anecdotally, I live in rapidly growing, tech-friendly metro
| and track housing data in the area. The county assessor's
| office exposes homeowner's names and you can easily spot the
| "private equity" owners. They are very few and far between.
|
| > The amount of private equity in housing
|
| I think this issue is, at least at the moment, overstated.
| Could be a problem in the future though.
| rayiner wrote:
| Segueing from "rich" to "multi-billionaires" is a neat trick by
| rich professionals to divert attention from themselves.
|
| Five years ago, we moved into a 3,000 square foot house in the
| Annapolis suburbs. We are right on the water so it cost a
| princely $485,000. But it was easy to get a house in the
| neighborhood for $300,000 or so, or just 4 times the county's
| median income. As a result, the neighborhood has lots of young
| families (many without college degrees!), retirees, etc. Today,
| the house next door is under contract for double the price, and
| is smaller than ours. As far as I can tell, there's no
| billionaires or even centi-millionaires anywhere near us. Just
| upper middle class people whose 401ks have done really well
| thanks to the Fed printing money like crazy, not to mention
| upper middle class welfare like more than a year of deferred
| student loan payments. (Lower income folks with student loans
| were already eligible for income based repayment.)
|
| Reaganism has won so completely in America that even AOC
| doesn't want to tax upper middle class people. But these are
| the people directly competing with the middle class for fixed
| resources. They're the people driving residents out of
| gentrifying neighborhoods, driving up the price of coffee, etc.
| There's not enough 0.01%-ers out there to move the needle on
| these assets and services.
| mywittyname wrote:
| Well, and most people have fucked up views on what defines
| "upper middle class". There was a topic on reddit the other
| night where the most popular posts were saying, without jest,
| that upper middle class _starts_ at $10 million bucks in
| liquid savings (and ends around $50MM).
|
| That seems to be a typical view on income and wealth in this
| country: people's opinions are wealth are out or proportion
| with reality by factors of like 100. For reference, upper
| middle class technically starts at around $120k/yr, so $10MM
| could pay 80 years of an upper middle class income. So
| there's no conceivable way an actual upper middle class
| family could actually save enough to be consider what the
| public thinks of as upper middle class.
| gamegoblin wrote:
| In my mental model, I've always considered upper middle
| class to be people who still do their own grocery shopping,
| but don't really look too closely at the prices.
|
| In my experience the kind of people this heuristic selects
| for is around the same monetary threshold you've noted in
| the low 6 figures.
| shadilay wrote:
| I think a bigger factor is that wealth is almost entirely
| defined by where you live. 120k/yr would be a lot in Iowa
| but not so much in SF.
| antognini wrote:
| Indeed, in San Francisco the low income threshold for a
| family of four is $117,400 / yr. [1]
|
| [1]: https://sfgov.org/scorecards/safety-net/poverty-san-
| francisc...
| exporectomy wrote:
| It's fun to blame the super rich but I'd say it's fundamentally
| due to a combination of population shift from rural to urban
| areas
|
| https://ourworldindata.org/grapher/urban-and-rural-populatio...
|
| and normal homeowners stopping densification out of fear of
| reducing the value of their own home or just not wanting the
| riff-raff living near them. These people are really the ones
| doing a directly harmful thing for pure selfish greed. They're
| not super-rich, they're just people's parents. But they're
| trying to make money by excluding others instead of doing
| anything useful.
| somethoughts wrote:
| Agree! It's also the densification of urban areas. Where once
| each occupant had a private office, now 5-6 SW engineers
| occupy the same office space footprint. That has implications
| for already dense urban office and associated housing needs.
| jackcosgrove wrote:
| The long-term trend in urban housing is diffusion, not
| densification. One hundred years ago a family of five lived
| in an apartment now occupied by a couple.
| nostromo wrote:
| What "don't tax the rich" policies? 61% of Americans pay zero
| income tax.
|
| Why are the rich getting tremendously rich? Because the Federal
| Reserve has printed money at an astonishing rate, which
| inflates asset prices. Who owns the most assets? The rich do.
|
| People are so focused on taxation (because it's something the
| average poor or middle class understands) when the real issue
| is the Fed (something most Americans aren't even aware of).
| aidenn0 wrote:
| > Why are the rich getting tremendously rich? Because the
| Federal Reserve has printed money at an astonishing rate,
| which inflates asset prices. Who owns the most assets? The
| rich do.
|
| This is exacerbated by capital gains and dividends being
| taxed at a lower rate; if the gains due to asset inflation
| were being taxed at 37% instead of 15%, then at least all
| this money printing would help balance the budget a bit...
| kube-system wrote:
| Tax is the solution, though, because we should treat owner-
| occupied homes differently than investment homes. Owning a
| home to live in it should be more accessible than owning it
| for capital gains. The market doesn't and can't price in this
| externality any other way.
| drunkpotato wrote:
| That income tax statistic is misleading. Most Americans do
| pay social security payroll taxes, which are income taxes,
| they're just not called "income tax."
| jdavis703 wrote:
| Even though social security is administered as a pay-go
| program, the amount of social security you can withdraw is
| based on how much you put in. This makes it much more like
| a forced savings account than a tax.
| shados wrote:
| Social security is more of a forced 401k. You will get back
| the money (in theory), but yes, it's not progressive and
| impact the poor more than the rich. It's a bit of an iffy
| one. If the social security system rolled up into federal
| income tax, it would be much more progressive, but it would
| likely receive significant pushback in the political space
| (not knowing its history, I assume it was structured as a
| separate thing exactly for that reason. I should read up).
|
| Still, the point still stand: federal income taxes are
| quite progressive, and would surprise most people who wave
| their angry fist asking for the rich to be taxed more. The
| problem is mostly at the state and local level.
|
| The top 50% pays 97% of federal income tax.
|
| If you include most types of taxes, including social
| security, you end up with something a little less
| polarized: the top 1% have an effective tax rate of a
| little under 34%, while the poors are around 20%. One could
| easily argue it's not progressive enough, but it's still
| not the usual narrative of "I pay more taxes than
| millionaires".
|
| A a handful of ultra rich abuse loopholes to death to pay
| very little, and these people are averaged in the
| statistics (so the average rich person actually pays more
| than the stats show, if only a little). It's a minority
| though.
| tshaddox wrote:
| > Social security is more of a forced 401k. You will get
| back the money (in theory)
|
| Don't you get the value of the money back for all
| taxation, according to any theory that approves of
| taxation?
| jdavis703 wrote:
| > Don't you get the value of the money back for all
| taxation, according to any theory that approves of
| taxation?
|
| Roughly speaking, anyone paying more in taxes than the
| per capita spending is probably not receiving the full
| value of their taxes. We see this where most welfare
| (Pell Grants, SNAP benefits, Obamacare, etc) and tax
| credit schemes (CTC, electric car credit, etc) phase out
| as people pay more taxes.
| shados wrote:
| Not nearly as directly though. Social security is
| basically money in -> money back. A glorified forced
| 401k, or at worse a kind of retirement insurance. It's a
| bit more separated. When I pay taxes, I don't get a
| direct return for it, I get (in theory) a fully
| functioning society.
|
| Social security would be a little closer to a sewer and
| water bill from the city (which you have to pay if you're
| a owner, but you get a sewer in exchange. Whether you
| like it or not). It's still not a great analogy because
| Social security is more deferred. It's really its own
| thing. Still, it doesn't work quite like a tax either.
|
| I personally wouldn't mind if it did though. It's one of
| those things where we'll pay for it one way or another.
| If there's an entire generation of people who can't
| properly retire and pay medical bill, we will pay for
| them through taxes anyway. May as well do it preemptively
| and efficiently.
| medvezhenok wrote:
| It's not quite a forced-401k though. Social security
| could technically be abolished (or payments diluted, etc)
| via an act of congress (even though politically
| unfeasible right now) - then you don't get anything out
| of your "investment". It's much harder to "abolish" a
| diversified 401k plan unless you abolish all private
| property (i.e. Russia 1917).
| shados wrote:
| Yup, like I mentioned, it's really its own beast, and all
| analogies will be flawed in some ways. But it also
| doesn't work quite like other taxes, at least in
| practice.
| droopyEyelids wrote:
| Analyzing taxation by headcount doesn't provide much insight.
|
| The top 10% of Americans own about 85% of the wealth in
| America, and the entire bottom 90% only own around 15% of it.
| fatnoah wrote:
| I fully expect that as we tax investment income more and more,
| we'll see this trend in real estate worsening as it becomes an
| even more attractive investment vehicle.
| nickff wrote:
| Why do they use "average" home price (without specifying whether
| it's mean, median, or modal), with "median" income? It makes
| these graphs very difficult to interpret.
| bushbaba wrote:
| Simple the 50 year or 100 year mortgage.
|
| But really covid was the perfect opportunity to let the housing
| market collapse and reset buying us an additional decade. Wasted
| opportunity by bailing out landlords.
| [deleted]
| p4l4g4 wrote:
| My eye was drawn to the graphs. Especially the house price /
| income graphs. There seems to be a trend in the US graph: if you
| zoom in far enough, you can see a consistent drop in Januari
| (every year). The UK graph does not show this trend..
|
| Does someone know the origin of this trend? And why the two
| countries don't show the same trend?
| rc_mob wrote:
| half the price of house is still more than i paid for it. market
| has been goofy
| mmaunder wrote:
| IMO we are in an inflationary cycle that is being underreported.
| Everything is becoming more expensive including you. It's just
| that housing is becoming expensive faster than you are.
|
| The US has a strong incentive to inflate their way out of debt
| post Covid. But the optics are catastrophic if they do it
| overtly. So they'll keep reporting it low as long as possible.
| Look around you for reality.
|
| If I'm right, you'll want to take on as much fixed rate low-
| interest debt as you can stomach. Which explains why housing is
| getting expensive faster than you are.
| MeinBlutIstBlau wrote:
| It still boggles my mind. I started working in 2009 when 7.25
| became the defacto minimum wage. But since then, I've noticed
| that the cost of everything has almost doubled faster in just
| the past 2 years than it did in the preceding 10. It's almost
| as if limitless government stimulus and inflation is bad for
| the economy...
| disqard wrote:
| Why does this graph start its y-axis at 3?
| kipchak wrote:
| My worry as a potential buyer is that rates might remain low and
| home prices will roll over. While I don't have a super high
| conviction that will happen, the potential risk of losing more of
| the value of something then my net worth greatly offsets the
| probable benefits of getting in now.
| peterlk wrote:
| I think there's a pretty critical piece of analysis missing here:
| inflation. An alternative explanation might be that housing
| prices are being driven up by inflation, and wages haven't caught
| up yet. There are two ways to lower the home value/income ratio:
|
| 1. Decrease housing prices 2. Increase wages
|
| We haven't seen meaningful wage increases for a long time now, so
| perhaps it is time. Maybe this is just a symptom of wages not
| tracking with inflation, and the solution is to pay people more.
| b9a2cab5 wrote:
| An increase in wages (real or nominal) without any increase in
| housing supply just leads to more money chasing the same supply
| which means higher rents. We are seeing this play out as we
| speak in every major city in the U.S.
|
| The solution is not to pay people more, it's to increase the
| supply of housing to the point that people can pay drastically
| less for housing. Look at China: apartment towers on every
| street, each 30+ floors easily. Where is that kind of density
| in the U.S.?
| teagee wrote:
| Add our current low interest rates to the mix as well and the
| picture changes dramatically
| 88913527 wrote:
| 100%. Though, interest rate based appreciation is likely at
| its apex, presuming zero is the floor. If we find ourselves
| with negative rates (after taxes and fees; there was one case
| of negative rates in Europe, but net inclusive of fees, it
| was still positive) -- then we're in truly uncharted
| territory.
|
| At this juncture, it seems most appreciation will arise from
| supply issues, which aren't new to the post-2008 world. And
| while we do have lots of unoccupied housing nationally, we
| don't have it stock in areas where it's most needed: e.g, job
| centers. You can easily find a $10k home in Detroit if you
| wish.
|
| The graph would be helpful it broke out metro versus rural
| areas, in addition to factoring interest rates.
| reducesuffering wrote:
| With increased wages come increased housing prices, as long as
| there is a supply mismatch to the baseline demand of housing to
| survive.
| newaccount2021 wrote:
| 3. raise interest rates
| sorenn111 wrote:
| I agree that wage growth is stagnant but I think the changes
| over the last 20 years of real median wages is definitely
| meaningful. Look at the changes from peaks in 2000, 2007 and
| also from a deep trough in 2012:
|
| https://fred.stlouisfed.org/series/MEHOINUSA672N
| bserge wrote:
| Why pay them more when they're content with what they get now?
| MathMonkeyMan wrote:
| I upvoted your comment because it clicked with me, but now
| I'm thinking about it more.
|
| _I'm_ content with my pay now, perhaps others aren't and
| there is little they can do about it. How might we even
| define "content" for a cohort as large as "anyone buying a
| house"?
| bserge wrote:
| No, trust me, people are content with renting a _room_ and
| living month to month.
|
| There's nothing to worry about.
| HeyLaughingBoy wrote:
| I'm starting a business selling guillotine insurance...
| kevinventullo wrote:
| I don't think I would characterize most millennials as
| "content" with their income level.
| ryanSrich wrote:
| The most surprising thing here to me is that a home is 5 times
| annual income. That seems insane to me. That would mean someone
| making $250k per year would be able to afford a $1.25m home. I
| don't see how that'd work, unless that person has almost no other
| bills and or lives in a state with extremely low income tax.
| After taxes and other expenses $250k / 12 is not that much.
| Certainly not enough to buy a $1.25m home.
| BooneJS wrote:
| How is this true? I think our home was 2x our family income. It's
| been paid off for a while.
| wheelinsupial wrote:
| What's hard to believe about this? Do you think the analysis is
| wrong?
|
| Since you've given an anecdote, I'll share mine.
|
| I make more than the median income where I live. The closest
| place that matches 2x my income is more than 100km away from me
| and it's a mobile home.
|
| My current apartment is 3.5 times what I earn, but that's
| because I bought it 5 years ago when it was 4.3 times what I
| earned. If I sold this apartment today, then someone earning
| the median income would be paying at least 7.5 times their
| income.
|
| 30+ years ago my parents bought a house for less than what I
| paid for my apartment. They also earned more than 2x what I
| earn now. So they might have been in a similar situation to you
| had they not gotten divorced. People buying that same house now
| have to pay 10-12 times income if they make what my parents
| did. Closer to 20 times income if they earn a median income.
| refurb wrote:
| Now adjust that chart for interest rates and monthly payments.
| keltex wrote:
| A more accurate measure of affordability change might be home
| payment to income ratio:
|
| https://www.corelogic.com/intelligence/comparing-two-home-pr...
| standardUser wrote:
| Some very clever and influential people better start finding and
| implementing real solutions to housing prices right now. If they
| don't, expect overwhelming support from Millennials for massive
| expansions to public housing and rent control, if not even more
| draconian measures.
| CountDrewku wrote:
| The solution is to leave cities that aren't affordable. Sorry,
| but you may not get to live beach-side or be in walking
| distance from your hipster coffee joint in downtown SF.
|
| I really think a lot of the problem is our generation grew up
| watching too many movies and they just think it's normal to
| live in some high end condo in Manhattan while working for
| Enterprise Rent-A-Car. That's not realistic.
| loeg wrote:
| The solution is to build more housing. California has
| historically been terrible about that but SB9 and 10 are
| significant steps in the right direction.
| tharne wrote:
| It consistently shocks me how rarely this is brought up as a
| solution. Price of something too high? Increase the supply.
| maxsilver wrote:
| Because it doesn't actually work. It helps a tiny little
| bit, in the places that are actually somewhat constrained
| (like SF/BayArea specifically). But it's not any kind of
| significant fix. Housing is an investment asset for stock
| market folks, it doesn't follow a Econ-101 understanding of
| "supply" and "demand" in any meaningful way.
|
| The Midwest and the South are both way ahead of California
| on the whole "just build more housing" thing, for example,
| and have been for many years. And yeah, it makes us
| somewhat cheaper than a coastal city if you have California
| dollars to burn. But our Price-to-Income-Ratio's are still
| in the high 5-7+ range too, just like everywhere else.
|
| We have basically zero population growth, and every single
| stray piece of land is getting built on right now (record
| high construction, record high new housing starts, for the
| past three years straight) and housing prices _still_ rise
| 10% to 15% every single year like clockwork, with no end in
| sight.
|
| "Just build more" sounds really pretty, but that alone will
| never get housing prices back down to a real-world-
| affordable figure for most people.
| taurath wrote:
| We don't build enough - density levels are extremely low
| compared to much of the world. Most US cities have a
| small downtown dense area and are surrounded by single
| family homes. Even the Bay Area is something like 80%
| single family zoned.
|
| NYC on the other hand is a good example of what you're
| talking about - it's expensive to live there and pretty
| dense already. But Tokyo for example had 150k housing
| starts on a recent year, which is more than LA, NYC,
| Boston, and Houston combined (source: https://www.google.
| com/amp/s/www.wsj.com/amp/articles/what-h...) - amp link
| to get around paywall.
|
| I think there's tons of evidence that we just don't build
| enough myself. In bangkok, another market, they're
| throwing up more new tall buildings every year than
| almost the entire USA does.
| resonantjacket5 wrote:
| > Housing is an investment asset for stock market folks,
| it doesn't follow a Econ-101 understanding of "supply"
| and "demand" in any meaningful way.
|
| You are partially right that Econ-101 doesn't explain it
| well, but if you take Econ-201 it does explain how
| housing supply/demand works. Why it doesn't work as easy
| as 101 is that the location matters for the 'good' unlike
| say cars which can be shipped in from anywhere. And also
| zoning artificially constrains land from being used for
| housing.
| marvin wrote:
| Are you saying that if the housing market has 10 million
| homes and 7 million people live there, prices will
| continue to appreciate to stratospheric levels because
| someone will magically appear to buy the excess 3 million
| properties and leave them without tenants? That's what it
| sounds like to me.
| newaccount2021 wrote:
| there will never be a market with 1/3 of homes empty and
| surplus - where do the builders get the capital to pay
| for land and construction?
| noneeeed wrote:
| It's been so frustrating watching people celebrating UK
| governments who have repeatedly failed to really tackle the
| supply side issues while propping up the demand side with
| tweaks that just increase the prices.
|
| The most amazing example of this was the stamp-duty holiday
| to help stimulate the market for a few months during covid.
| The maximum you could save was PS15k. The average house
| price increased during that time by about PS16k...
| russx2 wrote:
| They were still likely benefiting to be fair. Remember
| stamp duty is paid externally to the mortgage so it
| effectively comes off your deposit, not your loan.
| cryptoz wrote:
| This is brought up all the time. There is frequently huge
| opposition from locals anywhere regarding increasing
| housing supply.
| toxik wrote:
| And many times rightly so, living next door to a long
| construction project is a mistake I will only make once
| in my life. Utter insanity to be woken up by literal
| bombs going off in the bedrock.
| loeg wrote:
| Yeah, this is why SB9/10 work - they override the problem
| of that vocal minority of locals.
| tomkat0789 wrote:
| Me too! I think the average American thinks "increase
| supply" means skyscrapers with apartments, rather than
| lower impact multiunit, mixed-use apartments/street shops
| that are more common in Europe.
|
| Another issue with increasing supply/density: where is
| every household going to park its 2-3 cars?!
|
| (Disclaimer: I've been watching tons of City Beautiful and
| Not Just Bikes on Youtube)
| corpdronejuly wrote:
| The issue is that those kinds of mixed use neighborhoods
| are literally illegal in most American Suburbs. Strong
| Towns goes over this, but our zoning laws are basically
| designed to create and exacerbate this problem long run
| giantg2 wrote:
| Increasing supply can help some. But when you do that, you
| increase demand for material and labor, which can negate
| _some_ of the benefit depending on what markets we 're
| looking at.
|
| The real problem isn't supply at all, it's the distribution
| of supply and the choices of people to live there.
| ashtonkem wrote:
| > The real problem isn't supply at all, it's the
| distribution of supply and the choices of people to live
| there.
|
| I've said this plenty of times; America has plenty of
| homes, it just doesn't have enough homes where people
| actually want to live.
|
| You can get a home in my parents home town (which they
| left) for $60-100k right now. The issue is that there are
| no jobs and even fewer services. It was probably a great
| place to live 80 years ago when small towns were the
| norm, but now it's shrinking, aging, and a long distance
| from any of the amenities that most Americans now demand.
| km3r wrote:
| The same problem of the house price to income ratio shows
| there is as much of a housing shortage in rural America
| as well. "Solving" housing by moving all high CoL people
| to rural America is just going to price out all those
| with lower CoL area salaries. Our vacancy rate nation
| wide is low, likely well within the frictional margins
| that need to exist for a healthy market.
| ashtonkem wrote:
| This is certainly happening in small cities right now, as
| prices skyrocket.
| giantg2 wrote:
| "The same problem of the house price to income ratio
| shows there is as much of a housing shortage in rural
| America as well."
|
| Not necessarily. You can't use the overall picture data
| to make claims about localized or subcategories of data.
| Especially if the bulk of the people live in suburban and
| urban areas.
| giantg2 wrote:
| Remote work could solve a lot of this. I would love to
| live in a more rural area with cheaper housing.
|
| "... a long distance from any of the amenities that most
| Americans now demand."
|
| Like what? Many amenities and services have been moving
| to the at-home or online model for decades - arcades,
| movies, shopping, car buying, telehealth, etc. It seems
| there should be less reliance on physical amenities now
| than in the past.
|
| We are starting to movement from HCOL and high tax areas.
| Companies are moving for tax and regulatory purposes and
| most people seem happy to follow when the cost of living
| is significantly lower.
| ashtonkem wrote:
| The data seems to imply that remote work is letting high
| paid workers move from the coasts to smaller cities, not
| rural towns. The persistent low prices of houses in rural
| America certainly backs this up. Meanwhile home prices in
| small cities are skyrocketing.
|
| > Like what? Many amenities and services have been moving
| to the at-home or online model for decades - arcades,
| movies, shopping, car buying, telehealth, etc. It seems
| there should be less reliance on physical amenities now
| than in the past.
|
| My parents town's nearest major store is a Walmart 45
| minutes away. There is a significant difference between
| "we need less amenities now" and "we need no amenities".
| Committing to an hour and a half drive for anything
| Amazon can't deliver is sub ideal.
| 0xffff2 wrote:
| The price of houses in rural America seems to also be
| skyrocketing. My house 40 miles outside of the nearest
| "smaller city" (population ~20k) has gone up in value
| over 50% since I bought it 3 years ago.
| km3r wrote:
| No, vacancy rates are at near all time lows. Any
| reputable study will show we have a housing shortage.
| Even in rural America, house prices are skyrocketing. We
| need to build more, ideally near transit hubs as to
| minimize the effect on infrastructure, and reduce our
| environmental impact.
| giantg2 wrote:
| Tons of empty houses in the Appalachian region.
|
| The vacancy rate may be at a low, but it is still about
| 10%. Sure, we still need to build more houses, but the
| point here is that distribution is important to both. If
| you build houses in a HCOL area, the cost will be higher.
| We should be looking at redistributing to areas with the
| highest rates of vacancy an LCOL.
|
| Part of why prices are going up is inflation and cost of
| materials and labor. Prices in rural america are up, but
| I wouldn't say skyrocketing. There might be places that
| are skyrocketing, but I'm guessing they are in commute
| distance of the cities.
| resonantjacket5 wrote:
| Those aren't really useful homes then.
|
| The housing crisis is more accurately an imbalance of
| houses-to-jobs in a metro area.
| giantg2 wrote:
| Remote work can unbound that, at least within a low
| percentage situation, like under 10% vacant. Not to
| mention that some companies are moving out of higher cost
| areas to lower cost ones (like CA to TX).
| resonantjacket5 wrote:
| Lol, and once you build houses in those new regions, I'd
| assume those neighbors also block new housing from being
| built near them? Plus there's still plenty of jobs that
| cannot be done remotely, I feel generally in the tech
| world people are highly overestimating the amount of
| remote jobs proportional to the rest of the population.
|
| Why the companies are moving from California to Texas is
| exactly because Texas' local zoning laws aren't as
| stringent allowing for cheaper housing.
|
| The fix really isn't that complicated, it's allow more
| houses to be built where jobs are demanded. Not quite
| sure why people always twist and turn justifications for
| why only 1-story houses should be built.
| giantg2 wrote:
| "The fix really isn't that complicated, it's allow more
| houses to be built where jobs are demanded."
|
| Or move jobs to areas where housing is cheaper and easier
| to build. Just allowing more houses to be built doesn't
| solve it entirely. For example, labor will be more
| expensive in HCOL areas.
|
| "Why the companies are moving from California to Texas is
| exactly because Texas' local zoning laws aren't as
| stringent allowing for cheaper housing."
|
| Not really, although it might be a secondary component.
| The main part is taxes and regulation.
| resonantjacket5 wrote:
| > Just allowing more houses to be built doesn't solve it
| entirely. For example, labor will be more expensive in
| HCOL areas.
|
| Labor increased cost is really nothing compared to the
| zoning barring new construction. If labor was truly the
| barrier then when upzoned no construction would take
| place. Additionally a large reason why labor is so
| expensive is from the constrained housing in the first
| place -- again stemming from the zoning.
|
| > Not really, although it might be a secondary component.
| The main part is taxes and regulation.
|
| Zoning is regulation.
| Doches wrote:
| The solution, like it's been for pretty much all of American
| history, is to _move_. We're a migrant people; when
| opportunity calls or the cost of living where you are gets
| too high, we go west in search of greener, cheaper, less
| heavily-zoned pastures.
|
| Seems fitting that in the 21st century we flip that on its
| head. Cost of living in SF or Seattle got you down? Go East,
| young man! Head down to Texas or east to Ohio, and register
| to vote when you get there.
|
| Be the change you want to see.
| reidjs wrote:
| Most of my friends and family live here. I would rather fix
| the problems here than move.
| tomtheelder wrote:
| This is emphatically not the solution, nor is it a viable
| option for the vast majority of people. Uprooting oneself
| and losing your personal and professional networks is
| simply not realistic for most who aren't already very
| comfortable. Not to mention the damage that does to the
| communities that people migrate into.
|
| The solution is, and always has been, to increase supply,
| specifically in the form of increased density.
| asdff wrote:
| California being terrible is only a recent phenomenom. It
| used to be common to convert your sfh into an apartment
| complex. There are 5 story single lot brick apartments on my
| block that are still illegal to build on a neighboring lot
| today with SB9 and 10.
|
| Even just straight up rolling back to zoning codes that
| existed in 1960 without much further change would do a lot
| for supply. Los Angeles in 2010 had a population of 4 million
| and was zoned for 4.3 million homes. Los Angeles in 1960 on
| the other hand had a population of 2.5 million and was
| actually zoned for 10 million homes.
| m_ke wrote:
| Simple solution would be to put a property and sales tax ramp
| on additional homes. Make landlords who own N homes pay 1.5^N
| the normal rate.
| corpdronejuly wrote:
| The issue then becomes silly games with shell corporations
| hiding how many homes people own, which pushes homes into the
| hands of larger landlords who can afford to pay someone to
| play those silly games.
| soperj wrote:
| Don't allow corps to own housing.
| m_ke wrote:
| Make it pass through to the shareholders.
| [deleted]
| splistud wrote:
| What other ideas do you have for drastically raising the
| price of rent?
| m_ke wrote:
| I'd expect this policy to tank the real estate market,
| causing rents to fall along with it.
|
| Since you asked, another idea would be to slap a vacancy
| tax on top of this.
| topspin wrote:
| "better start finding and implementing real solutions to
| housing prices right now"
|
| They can't. Providing supply will suffer the wrath of
| BANANA/CAVE/NIMBY anywhere you dream of living. Constraining
| demand will either get you voted out of office or devastate
| your political network or both, depending on which policy you
| attempt. You're competing with a whole planet full of people
| that want to live here and have more means than you.
|
| Seek property where demand is lower and development isn't
| effectively outlawed. Forget any livable cities or high
| population states. For 99% of you that means living far away
| from your preferred locale among people you probably loath. If
| that's not acceptable then keep renting or live in a van.
|
| The good news is many of you can work remote. That is an
| affordance you can leverage to great benefit.
| Doches wrote:
| > For 99% of you that means living far away from your
| preferred locale among people you probably loath.
|
| Parent comment is vitriolic but not actually wrong. Myself, I
| take great comfort in the idea of huge swaths of liberal,
| well-educated millennials and xennials migrating out of
| coastal cities and into small towns across the South and
| Midwest. Can you work remotely? Want to own your own home on
| a multi-acre lot for $100k, and live in a place with sunshine
| and warm weather nine months out of the year?
|
| Sure, you'll end up living in the most conservative parts of
| deeply red states -- but try it. Live among people you
| disagree with -- we're all still Americans, it'll be OK --
| and if enough of your friends and fellow Ivy alumns make the
| jump you'd be surprised how easily you could turn Texas or
| Georgia nicely purple.
|
| We've got to end the big sort, at any cost. And the hilarious
| difference in cost of living is probably our last, best hope.
| taurath wrote:
| I think there's plenty of real reasons people don't do this
| economically, but don't downplay the social parts of it -
| we have very Balkanized communities in the US. Ask a
| minority what it's like going on a road trip sometime - I
| guarantee there's many places where they won't want to
| stop.
|
| Living in a place with no amenities, an extremely
| regressive/borderline extreme social climate and a lack of
| economic opportunity for people who don't have remote tech
| jobs and it gets depressing really fast. Also when you try
| to buy healthy food from a dollar general.
| twofornone wrote:
| >I guarantee there's many places where they won't want to
| stop.
|
| As someone who recently made the jump to a rural area,
| these problems are almost entirely imaginary. The notion
| of backwards, ignorant, racist rednecks occupying all the
| rural lands is nothing but a bigoted stereotype.
|
| Southern hospitality is real; and while rural peoples
| will be more likely to notice and acknowledge cultural
| differences, they generally are open minded and just as
| respectful of nonwhite neighbors as white ones. It's the
| city folk who don't understand the roles that politeness
| and respect play in southern living, necessary for the
| unbelievably high trust society that only really exists
| outside of cities.
|
| The truth is that urbanites have been hypersensitized to
| so called racism, and completely mislead as to what
| rural/conservative culture is actually like. But I don't
| mind a bit, that means more cheap land for me.
| rjbwork wrote:
| I was ready to buy an estate in the Georgia mountains
| earlier this year - then I saw the internet connection
| options. Then I looked up how much it would cost me to get
| a decent wired connection out there.
|
| Totally unviable for tech workers to live in most of the
| solid red areas of the country strictly due internet
| capabilities, or lack thereof.
| kyleblarson wrote:
| Extrapolating from 'rural mountainous Georgia' to all red
| states, including Texas and Florida is a bit of a
| stretch. I live in a remote mountain town in North
| Central Washington and there are dozens, if not hundreds,
| of remote tech workers. I have good internet through a
| local ISP and starlink is now prevalent in our area as
| well.
| rjbwork wrote:
| Fair enough. I was looking in the triangle between
| Asheville, Nashville, and Atlanta. The few homes i was
| like "I will buy this now if i can get good internets"
| did not play out for me. I'm looking for an excess of
| land though, to indulge my many hobbies, so that is
| certainly constraining my options. It's okay though, I'm
| in no rush. Once Starlink is rolled out en masse I'm sure
| the equation will drastically change for me.
|
| Also, FWIW, I meant more rural areas than just "red
| states". Even in solidly republican states there is a
| fairly prominent urban/rural divide.
| HeyLaughingBoy wrote:
| Then keep looking. I'm a liberal, minority techie living
| on a farm: one of my base requirements for moving here 15
| years ago was at least a minimal amount of wired
| broadband.
|
| This summer the phone company has been pulling fiber all
| over the place. I was told that it's not going to be put
| in use until next year, but at least they're planning
| ahead.
|
| _Especially_ after the last year and a half of distance
| learning and working from home, there is a big push all
| over the place to get faster internet connections because
| the people already living out here are demanding it.
| JoeAltmaier wrote:
| Got mine a month ago! In rural Iowa.
| jeffbee wrote:
| OK but this is not actually happening. Young, well-educated
| people with high incomes are the only types of people who
| continue to flow into California. They are driving out
| poorer and generally less-well-educated people, because of
| course that is how it will work in a competitive housing
| price market.
|
| See this report for details:
| https://lao.ca.gov/LAOEconTax/Article/Detail/675
| splistud wrote:
| If you lived in the types of areas where people 'move to',
| you'd see it's not the state that turns purple, it's the
| immigrants. Then they turn reddish (or they quickly leave).
| polskibus wrote:
| Hey, you can leave US you know. Europe will probably gladly
| have you.
| CountDrewku wrote:
| Yeah you might wanna look up housing prices there. Most
| young people don't own and the average size of the places
| they live in is much smaller.
| ChuckNorris89 wrote:
| Please don't. The housing market is fucked in EU urban
| areas now too. Without an inheritance you can't afford to
| buy anything decent around a developed city with jobs
| even on a tech salary.
|
| As selfish as this may sound, the last thing we need is
| more foreign competition on the housing market with
| bigger pockets.
|
| It would be fair that if people from the US want to buy
| property here with their foreign megabucks, we should
| also get unrestricted visa-free access to the US labor
| market. Tit for tat. Otherwise it's just unfair to
| Europeans to be outspent out of their own housing market.
| quantumBerry wrote:
| Yes, because nothing would ruin Albania or Georgia more
| than a few tech workers siphoning profits from US into
| their local economies.
| ChuckNorris89 wrote:
| Of course it wouldn't ruin the countries themselves, the
| countries would profit somewhat, but it would however
| hurt the middle class since now they have more
| competition on the housing market that's much wealthier
| so you're increasing inequality.
|
| Just because the country is profiting from your
| megabucks, doesn't mean the average Joe is.
|
| Look at Austria. The most touristic areas are profiting a
| lot from all that foreign tourist money, but a lot of the
| locals can't afford to live there anymore as all that
| tourist money is only going into a few pockets. Those who
| don't already own something or have an inheritance have
| been royaly fucked by that tourist money. It increases
| inequality between the haves and the have-nots.
| quantumBerry wrote:
| > it would however hurt the middle class since
|
| If the middle class are the ones buying the properties,
| then they're the ones selling them. Therefore it actually
| injects money into the middle class, foreign capital that
| never existed in that country.
|
| >he most touristic areas are profiting a lot from all
| that foreign tourist money, but a lot of the locals can't
| afford to live there anymore as all that tourist money
|
| Those who move to a country to work and live there on
| anything but a very short term basis on not generally
| considered tourists. Most of the money flowing into the
| rich is a function of capitalism, not just tourism. You
| can examine virtually any industry and make the same
| statement. Yet, some fraction of money is usually better
| than nothing for the middle class people benefitting.
|
| The US has your Austrian analogue, it is called Hawaii.
| In Hawaii most money is made from tourism. The common
| person there is mostly employed in tourism. Housing
| prices are high, because lots of people want to live
| there. The result when it was mostly closed off for
| coronavirus was that although demand for housing
| decreased, unemployment skyrocketed without tourism,
| making the middle class worse off.
| ChuckNorris89 wrote:
| _> If the middle class are the ones buying the
| properties, then they're the ones selling them._
|
| Sorry but since you make no distinction between someone
| owning and selling a house ($500k asset in Austria) and
| someone who doesn't own a house and call them both
| middles class is just plain wrong.
|
| The property owner middle classer is significantly better
| off than than the other and would benefit even more from
| your intention of buying while the other middle classer
| is worse off without a property to his name and will
| suffer more from being in competition with you.
|
| Sure, one guy profits, but you can't possibly tell me
| with a straight face someone else doesn't get screwed
| from this wealth driven game of music chairs which is the
| property market right now.
| quantumBerry wrote:
| You just said the middle class was the competition for
| these houses. If the middle class are the ones who own
| these houses it follows they are the ones selling them.
| You seem upset you were caught up in your fallacious
| logic and fail to understand it's the middle class making
| the money off these sales.
| ChuckNorris89 wrote:
| I think you misunderstood my comment, but whatever.
| Still, to follow up on your latest example, the classes
| below those who own the properties you want to buy get
| screwed since you're still increasing inequality between
| the asset owners and the non-asset owners by increasing
| housing demand. Simple.
| quantumBerry wrote:
| I don't follow. The total wealth inside country starts
| out here:
|
| value of house + value of rest of economy.
|
| Now someone foreign comes into the country to live there
| and work in tech from abroad. They buy a house. Now the
| wealth inside the country looks like this:
|
| value of house + foreign money paid for house + value of
| rest of country.
|
| You can see that the wealth inside the country has
| increased. If it is the middle class owning those houses,
| then the wealth of middle class has changed by the
| difference in value between the value of the house and
| what it was sold for. The middle class then further
| benefits from whatever money the foreign worker spends in
| the country, which is a net gain for the middle class,
| plus the injection into the economy of the foreign money
| paid for the house. The only way the middle class end up
| worse off here is if the foreigner doesn't live and work
| here, and is just a foreign landlord (siphoning money out
| of the country) -- which is something I think we can both
| agree is detrimental.
|
| I will say here in the US people have a lot of problems
| with foreign landlords and people who buy property here
| and don't live here. But only the most backwards rednecks
| have serious issue with an honest foreigner who buys a
| normal middle class house to live their lives, especially
| if they are injecting foreign capital into our economy.
| silisili wrote:
| You've basically described the sentiment and current
| situation with the US midwest and south.
| jeffbee wrote:
| I know in Berlin they consider themselves to be having a
| housing crisis but last I checked apartments in desirable
| districts of Berlin were like a quarter of Bay Area
| housing prices, for example < EUR1000/mo for a 2 bedroom
| / 50 m^2 apartment.
| Ekaros wrote:
| So are the wages. Or maybe not exactly that bad, but they
| are no where close.
| ChuckNorris89 wrote:
| When was that? Prices are higher now for something
| decent. Also I was taking about buying property not
| renting.
|
| _> districts of Berlin were like a quarter of Bay Area
| housing_
|
| So what? Nothing touches Bay Area prices, even in the US.
| And then there's the income difference as well.
|
| Try comparing to something more similar like Texas. Last
| I checked average dev wages in Austin are easily 2x more
| than average dev wages in Berlin while buying a house
| there costs the same. So who's buying power is stronger
| then?
|
| Buying something decent in Germany now, in the current
| market is nearly impossible without an inheritance.
| jeffbee wrote:
| Before COVID-19, when I was still allowed to travel :-/
| ChuckNorris89 wrote:
| Prices are higher now. And please don't compare Berlin to
| SF it's apples and oranges.
| jdavis703 wrote:
| > Live among people you disagree with -- we're all still
| Americans, it'll be OK
|
| I grew up in the American south, and migrated to California
| as an adult. As a Black person I can say this doesn't work
| as well in practice. It's better than the old days (when my
| mom was growing up segregation was still legal and the
| military warned her parents to be back on base before
| sunset.) But I'd much rather live in a welcoming area.
| Doches wrote:
| That is...a very fair qualification. I grew up white in
| the South, where my mom used to tell me stories about
| school integration. Knowing that my otherwise-welcoming
| neighbors/family/peers might randomly turn out to be
| racist assholes when confronted by someone of slightly
| different skin tone was and remains my least favorite
| thing about the place, by a margin that's wider than
| Texas.
|
| There's "be the change you want to see", and then there's
| "move to a place where you're likely to murdered in the
| street for pointless, intractable reasons." I can't say I
| blame you for getting the hell out; I just hope that in
| our lifetime you feel comfortable going back to where you
| grew up.
|
| The weather's great (except for the hurricanes) and the
| barbecue is amazing (except in the Carolinas). Maybe one
| day you can get back here and we can all work together on
| fixing whatever the hell is wrong with (some of) the
| people.
| sparrc wrote:
| > Providing supply will suffer the wrath of BANANA/CAVE/NIMBY
| anywhere you dream of living
|
| TBH I would have said the same thing 5-10 years ago, but I
| think this notion is outdated now.
|
| I live in a famously NIMBY city (Seattle) and things have
| changed a lot in the last 5 years. I would guess that single-
| family zoning will be gone within 5 years.
|
| Although I don't buy it, some people even argue that SFH
| zoning is already gone in Seattle due to ADU/DADU reforms.
| everdrive wrote:
| And yet no one is promoting vasectomies. I know exactly how
| to reduce demand without increasing supply, but it'll take
| about 30 years.
| CountDrewku wrote:
| The birth rate is already dropping in the US....
| topspin wrote:
| And yet the population is not. Ergo, you're competing not
| just with your fellow citizens, but the whole planet.
| [deleted]
| tov247 wrote:
| The solutions are political not technical. Housing needs to be
| something that isn't used primarily to make money.
| Cooperatives, Vienna-style PPPs, and a society where if your
| house price doesn't constantly increase you can afford to
| retire.
| ido wrote:
| Why do you consider the 2 examples you gave "draconian"?
| zbrozek wrote:
| Not the OP, but I'll guess that it's because both of them
| strongly erode property rights. Another, more freedom-
| preserving, approach is to make it easier to build build
| build. Planet Money had a decent introduction a couple years
| ago.[0]
|
| In the current NIMBY climate, my neighbor is struggling with
| the red tape to repave her driveway. Building a new home
| around here seems about as improbable as a hobbyist making
| the first human Mars landing.
|
| [0] https://www.npr.org/sections/money/2019/03/05/700432258/t
| he-...
| spoonjim wrote:
| How does public housing abridge property rights?
| zbrozek wrote:
| Sorry, I think I conflated "public" with "low-income"
| housing in reading the comment. They're clearly
| different, though often uttered together.
| spoonjim wrote:
| How does low income housing abridge property rights?
| bakuninsbart wrote:
| Are property rights freedom-preserving? One of the most
| infuriating bits of my visit to the US West coast was
| driving up from LA to SF and a lot of the really nice bits
| of coast not being accessible to the public. There's
| compromises like germanic Jedermansrecht [0], but overall I
| think limiting property rights is often a net gain of
| freedom.
|
| I do agree on the problem of NYMBYism though. There's a
| funny-if-not-so-sad dispute here in Berlin at the moment,
| where the leftist state government is desperately trying to
| build public housing while the leftist local government in
| the district of Lichtenberg is blocking a major developing
| due to local concern. Sadly I can't find an article in
| English, but I am sure there are dozens if not hundreds of
| examples for that.
|
| [0]https://en.wikipedia.org/wiki/Freedom_to_roam
| quartesixte wrote:
| Those coast lines are most likely either inaccessible due
| to environmental protection concerns, or just straight up
| not easily accessible -- lots of cliffs on the West
| Coast.
|
| Or just not very fun to be on. The beach cities of
| Southern California are blessed with having some of the
| most accessible beaches.
| reducesuffering wrote:
| All of the California coastline is public.
| jcrawfordor wrote:
| California coast is public up to mean high tide. This is
| appreciably different from, for example, Oregon where it
| is public further in (typically to the vegetation line,
| details are slightly complex). It makes it significantly
| easier for California property owners to de facto remove
| public access to beaches, which is very common in some
| areas. On top of this, CA courts have often been
| reluctant to enforce public rights to beaches.
| ashtonkem wrote:
| > Are property rights freedom-preserving?
|
| You'll find that historically speaking "freedom" and
| "property rights" are treated as synonymous for some
| political theorists, including the ones that founded the
| United States. This is one of the foundational aspects[0]
| of liberalism that has come to rule the western world;
| the idea that property rights are sacred and must have an
| exceptionally high bar for the collective to intercede
| on.
|
| Whether or not that equivalence is true is a debatable
| matter. One of the unfortunate outcomes is the ability
| for the individual to withdraw their property from public
| use, often to the detriment of the whole (such as the
| beach example you provided).
|
| Also, the fact that the founding thinkers of liberalism
| and America itself tended to own slaves or trade in them
| doesn't necessarily disprove the basic argument, but it's
| a pretty strong counter point at least.
|
| 0 - There are of course other tenants to liberalism that
| I've not included here, due to their irrelevance for the
| subject at hand.
| JTbane wrote:
| Econ 101 says that rent control (in effect a price ceiling)
| just results in scarcity (people are unable to get ANY
| housing), rather than actually reducing the cost of housing.
| Rebelgecko wrote:
| It also exacerbates other problems that go hand in hand
| with urban areas, such as traffic. Most people would rather
| stay in their rent controlled apartment and drive an hour
| to work instead of having to move and pay the current
| market value
| Enginerrrd wrote:
| I'm not sure why you're being downvoted. This is the
| theoretical prediction based on simple microeconomics. By
| example, I believe NY rent controls were ineffective to the
| point where rents outside of controlled areas went higher
| than they otherwise would have and within rent control
| areas there was (and is) scarcity of housing.
| standardUser wrote:
| Draconian is a strong word (but cool-sounding) and what I
| really mean is "antiquated". But they are also somewhat blunt
| instruments and have historically lead to unwanted
| consequence. We already have more modern, market-oriented
| solutions, like vouchers and tax-credit housing, but those
| have problems too. My bigger point was, Millennials tend to
| react big when specific issues rise to the forefront, and if
| there aren't better solution than what is already on the
| table, we risk people clinging to whatever ideas do exist,
| which in the realm of housing, are mostly shit ideas.
| beepbooptheory wrote:
| Its interesting how often on HN the main problem always
| ends up being how people will "feel" about the next crisis,
| and the danger of that feeling itself. It's a weird kind of
| proxy self-consciousness older generations have on behalf
| of the economy. Always and forever: "no no, it's not that
| bad, really!"
|
| meanwhile people are very much homeless, whether they are
| millenials or not, whether they react strongly or not.
| mrfusion wrote:
| Rent control really doesn't make sense. If we could make
| things cheaper by passing a law we'd do it for everything.
|
| Rent control won't work for the same reason a price control
| for food or cars won't work.
|
| https://freakonomics.com/podcast/rent-control/
| standardUser wrote:
| Some forms of rent stabilization make perfect sense. But
| most of the policies implemented in big cities are far too
| restrictive. There is a lot of policy to be explored
| between "your rent never goes up forever" and "you can't be
| immediately evicted for no reason". No one wants the
| latter, but there are better ways to address that, like
| much longer notices for rent increases, or requiring multi-
| year lease options.
| mrfusion wrote:
| Sounds feasible. I don't normally think of that as rent
| control.
| nradov wrote:
| San Jose limits annual rent increases to 5%. That seems
| reasonable (unless inflation gets out of control).
| Tenants aren't immediately forced out of their homes if
| the market rate jumps 20% in one year. But landlords can
| still eventually raise rents to market rates spread out
| over several years. There's no absolute limit on maximum
| rent.
| laverya wrote:
| If it was inflation + 5%, I'd be fine with that - but a
| flat 5% limit only works so long as inflation stays low.
| dragonwriter wrote:
| Technically, it only works if the (notional, I'm not sure
| this is an actual tracked category) PPI for rental
| housing is low, general (CPI) inflation may loosely
| correlate with that, but its not _directly_ relevant.
| ralph84 wrote:
| Inflation may not be out of control yet, but certainly
| things like insurance, parts and labor for repairs and
| maintenance, and HOA dues are already increasing more
| than 5%/year. And property taxes alone are guaranteed to
| increase 2%/year in California. Not saying we should feel
| sorry for landlords, but when some parts of a market have
| price controls and other parts don't, distortions are
| inevitable.
| dragonwriter wrote:
| > And property taxes alone are guaranteed to increase
| 2%/year in California
|
| No, they aren't. Assuming no increase in property tax
| rate (which is a good assumption, since your local taxing
| jurisdiction almost certainly already charges the maximum
| nominal rate of 1% allowed under Prop. 13), your property
| taxes will increase only by the amount your assessed
| value for taxation increases, which is capped to the
| _lower_ of 2% or the actual annual (trailing) rate of
| inflation.
|
| For 2021/2022 the actual cap is 1.036%, based on the
| actual California CPI for October 2019 through October
| 2020.
| antisthenes wrote:
| > If we could make things cheaper by passing a law we'd do
| it for everything.
|
| Price controls for medicine are proven to work, based on
| single payer European systems. They cost cheaper and
| provide better outcomes than the US system.
|
| Yet here we are.
| JamesBarney wrote:
| The way price controls affect supply is people build less
| of the thing who's price your controlling.
|
| Since medicine is mostly a technological good, it lets
| the rest of the world freeride off America paying for
| much of medical R&D.
| mrfusion wrote:
| That's a little different because we're dealing with a
| monopoly which can raise prices above the market rate.
|
| But you are correct that in those cases it can work well.
| Same with other monopolies like utilities.
| nradov wrote:
| That is an example of what economists call the free rider
| problem. European countries get cheap drugs only because
| they are effectively being subsidized by Americans.
|
| https://www.investopedia.com/terms/f/free_rider_problem.a
| sp
|
| Outcome differences are due more to public health and
| social factors like obesity. Expensive drugs or lack
| thereof have only a tiny impact at the population level.
| toomuchtodo wrote:
| US pharma spends an outsized amount on sales and
| marketing, expenses that could be eliminated if public
| funding was spent directly on R&D.
|
| Europeans aren't free riding; they're paying a reasonable
| rate for these goods while Americans are shouldered with
| extraction of revenue for pharma profits and those
| inefficient (and arguably unnecessary) sales and
| marketing expenses.
|
| Only two countries in the world permit marketing directly
| to consumers to promote pharmaceuticals: the United
| States and New Zealand.
| nradov wrote:
| There is already a lot of public funding for basic
| biomedical research. Actual drug development is another
| thing entirely. If this were publicly funded then funding
| would be allocated based on political priorities rather
| than realistic scientific and economic assessments. That
| misallocation of resources would overwhelm any savings
| from reducing sales and marketing expenses.
|
| But in general the traditional drug development approach
| of finding small molecule drugs to treat specific
| diseases is running out of steam. Most of the low-hanging
| fruit has already been picked.
| cestith wrote:
| A ban on marketing prescription-only drugs directly to
| the public existed in the US until recent decades. The
| amount spent on marketing skyrocketed when that ban was
| removed.
| nradov wrote:
| Since there's no way to reinstate the marketing ban short
| of a Constitutional amendment (basically impossible) that
| point is moot.
| rurp wrote:
| It's not like profit motive is a great allocation method
| either though. There are massive perverse incentives to
| favor expensive ongoing treatments over cures or
| prevention.
| disordinary wrote:
| But, because healthcare is public in NZ you wouldn't
| bother with the brand names as you'll have to pay for
| them (generics are funded by the taxpayer through
| Pharmac, which is the crown entity that is responsible
| for buying all publicly funded medication for NZ).
|
| It's like Private hospitals, we have them, but very few
| people use them as the public system is better equipped
| and paid for by the tax payer.
| FredPret wrote:
| That's different. The drugs are invented and produced all
| over the world and can be imported to Europe. So low
| European drug prices will harm overall pharma innovation
| a bit without killing the entire market.
|
| Housing, OTOH, is always local. Low rents will discourage
| development which will make the real, underlying problem
| worse.
| lordnacho wrote:
| As described by Freakonomics and general economic
| education, this is more or less right.
|
| However keep in mind there's two kinds of rent. You can
| rent a house, or you can rent money and buy a house.
|
| Historically and across countries there's been some
| willingness to restrict mortgage LTVs and interest-to-
| income ratios. At least in some European countries the
| interest ratio depends on a fixed interest rate (eg 5%)
| rather than the current interest rate.
|
| We can create and destroy money more easily than we can
| create and destroy homes, maybe that's a worthwhile lever
| to try.
| alex_sf wrote:
| Millenial homeownership is almost at 50% this year. The people
| priced out are the loudest, but it's not overwhelmingly common
| in most parts of the US.
| Miner49er wrote:
| That's still way lower then older generations.
| admax88qqq wrote:
| Older generations consumed resources at far higher than
| sustainable rates. I don't think older generations is an
| acceptable benchmark.
| ac29 wrote:
| Of course it is, Millennials are as young as 25 this year.
| Its doubtful many can afford a house just a few years out
| of college (and even more doubtful if they didnt go to
| college). Even those that can may not be ready to settle
| down and commit to such a large purchase.
| Miner49er wrote:
| Yeah, but it's still also lower then it was for the older
| generations when they were at the same age.
| djrogers wrote:
| citation?
| Miner49er wrote:
| https://www.apartmentlist.com/research/homeownership-by-
| gene...
| itake wrote:
| I don't know if this is a problem? I am perfectly happy
| focusing on my career and my hobbies and not worrying about
| home repairs, insurance, taxes, natural disasters, etc.
|
| It is more financially and emotionally rewarding for me to
| prep leetcode, solve software problems, etc. than it is to
| deal with home renovations, plumbing repair, etc. on a
| home.
|
| Plus the flexibility of location is huge. I can follow the
| job market much easier if I am not locked into an address.
| gtaylor wrote:
| Not everyone has the same goals or mobility as you. What
| you described is especially tough for families with kids.
| refurb wrote:
| Indeed. Canadian home ownership is a decades long high yet
| housing affordability is a hot topic.
| Doches wrote:
| It's not so much that they're the loudest as it is that the
| other 50% of us are busy living in affordable parts of the
| country and getting on with our lives.
| tempfs wrote:
| 1. Residential homes are no longer allowed to be 'investment
| properties' aka every person(or married couple) can own exactly
| one house. Corporate entities except for Banks(even then can
| only own it for the time it takes to sell it in the case of
| foreclosure) can't either.
|
| 2. Only actual Americans can own property in America. Single-
| fam, multi-fam, land,etc. doesn't matter.
|
| Exactly no one needs to rent houses if mulit-fam exists and
| actual houses aren't speculative instruments or places where
| foreign nationals hide their money.
| jakemoshenko wrote:
| Where do you expect rental housing stock to come from in this
| scenario?
| JamesBarney wrote:
| 1. Just bans people from renting houses to other people. This
| reduces the supply of rentable houses to 0. Reduces the
| supply of rentable stock in general. And very slightly
| marginally reduces the price of houses.
|
| 2. Can corporations still own commercial property? And can
| foreigners own corporations ?
| simonsarris wrote:
| Doesn't that sound insane from a mile away? By the time you
| are done making exceptions, you'll have infinity carve outs.
| This is not a solution so much as a way to squish the problem
| into a different, weirder shape.
|
| 1. Everyone is forced to sell their lakehouses, cabins, ADUs?
| Detached mother-in-laws? (wtf is "Exactly one house?")
|
| No one is ever able to rent a single family home ever again?
| Right now 14.5 million households / 44 million residents rent
| single-family homes in the United States. They're... out of
| luck? On the street? Gotta save for a down payment? If those
| houses are force-sold, don't you think people-other-than-the-
| current-inhabitants will come in and buy them?
|
| Actually, can anyone ever rent ever again? Or is it a buy-vs-
| homeless dichotomy here? Or do towns have to become miniature
| companies and play landlord? Or states?
|
| 2. Timber companies are forced to give up their land,
| bankrupting all of them and driving the cost of wood sky
| high. Mobile home land must now be sold, except no one can
| buy it. Farms except for sole proprietors are forced to give
| up their land (sorry partnerships, amish, people with
| discontiguous lots, and everyone who wants to eat this year,
| you're out of luck)
|
| IMO you should focus on laws that let people build more (eg,
| ADUs, duplexing) rather than getting out the stick and hoping
| there won't be huge side effects.
| toiletfuneral wrote:
| We already have waaaaaay more empty houses than homeless
| people, so that seems like kind of a huge side effect from
| speculation / investment that is terrible for normal
| people.
|
| Can someone answer why any developer would ever create low
| income housing when margins on luxury condos / McMansions
| are so high?
|
| Neoliberal capitalism is totally failing at efficiently
| providing housing to anyone other than the rich, but sure,
| lets just keep sucking up to developers
| swiley wrote:
| There are good reasons to be a renter, it's hard enough
| getting an apartment in the time between accepting a job
| offer and your start date, I couldn't imagine hunting for a
| house/condo in that time.
| leetcrew wrote:
| > Exactly no one needs to rent houses if mulit-fam exists and
| actual houses aren't speculative instruments or places where
| foreign nationals hide their money.
|
| okay, but what if I have (an opportunity for) positive
| cashflow, minimal savings, and want to move away from my
| parents' house? does it just suck to be me or what?
| ch4s3 wrote:
| Who builds new homes if builders can't own them pre-sale? I
| imagine you have a carve out for that, but who qualifies as a
| builder?
|
| What about people who want to live in cities? How do they
| come together to build say a small condo building? Do we only
| allow co-ops? How is that financed?
|
| When you say "Americans", do you only mean citizens or
| permanent residents? Where do temporary residents live?
|
| How do people move to new cities/states? Where will the new
| housing come from?
| lastofthemojito wrote:
| Even "simple" solutions like those you've proposed so often
| wind up having unintended consequences.
|
| For your first proposal, I wonder about folks buying a house
| through an LLC or trust as folks often do to protect their
| privacy. Are we banning that? I also wonder about inheritance
| - if I own a house and my parents die, leaving me their
| house, how long do I have to sell one to be "in compliance?".
| Maybe their house needs work and I'd like to spend a few
| months or a year fixing it up to maximize what it'll sell
| for. Is that ok? And speaking of timing - I remember during
| the wave of foreclosures after the last housing bubble, banks
| kept a lot of houses off the market for a while to moderate
| prices, rather than listing everything at once and panicking
| the market further. Seems like banks ought to have some
| leeway to maximize their return (e.g. if a house has a pool
| and is foreclosed on in the late fall, maybe they judge that
| waiting until spring would get a better response from
| buyers).
| bserge wrote:
| That's gonna happen anyway, so as the millennials said, YOLO.
| mistrial9 wrote:
| California "small house" duplexes are being built at this
| moment, by the thousands.. maybe permits, maybe not.. just
| saying what I see
| MrFlibbles wrote:
| Affordability is limited by lending requirements.
|
| Start with home price of $250k for example. If you can manage a
| 5% down payment (arguable) then the loan is for $237.5k.
|
| With a 30 year loan at 3.5%, the principal and interest is
| $1,066.48 per month. Gross this up by 0.7 for taxes and insurance
| to get $1,523.54/month.
|
| Lenders will typically allow your payment to be as much as 28.0%
| of your gross income. This get us to income of $5,441.23/month or
| $65,294.76/year.
|
| The multiple now if $65.3k income to $250.0k of house or roughly
| 3.83X.
| zzleeper wrote:
| I just got a 15yr fixed rate at 2% (!) which made me think a
| lot about what's behind your comment. In particular, what will
| happen once rates go back up:
|
| 1) Right now we are at zero short term rates, and moreover
| mortgage rates are propped due to Fed purchases of Agency MBS
|
| 2) Say rates go up 2% (not crazy) in parallel. So now your 3.5%
| becomes 5.5% which is still historically moderate. However, the
| 5441 required monthly income from your formula is now 6877! 26%
| increase.
|
| 3) What then? Prices go down?
| lbotos wrote:
| House price is inversely correlated to interest rates BECAUSE
| most buyers are getting a mortgage. So the price of the house
| "will drop" (hard and fast estimate here not a law) if
| interest rates rise because people are paying for
| house+interest = total_cost_able_to_pay.
|
| I watched this play out in real time as I purchased my home.
| Rates dropped, prices went up to fill the gap. Owner got a
| bit more money vs the bank instead.
|
| Basically I gave my money to a different person, but the "all
| in" was about the same.
| kipchak wrote:
| Regarding 3 I would figure either prices would have to come
| down, financial assistance comes from somewhere, or the house
| winds up being rented after being purchased by a management
| group.
| steveBK123 wrote:
| Probably need a 3rd time series that takes interest rates into
| account to provide a monthly-cost view.
|
| Given sufficient savings, the price range for home shoppers is
| controlled by the monthly outlay which is driven by interest
| rates.
|
| Sub-3% interest rates in 2021 means that the same monthly cost
| drives the headline house price a lot higher than 6%+ pre-2008.
| dpierce9 wrote:
| Pay is not gaussian so comparing median salary to average home
| price is confused (average salary is 45% more than median salary
| in the US with wide regional variation). Case Schiller also only
| looks at single family housing stock so it won't capture anything
| higher density (apartment like condos, duplexes, etc).
| game_the0ry wrote:
| A more relevant metric to consider - monthly mortgage payment to
| monthly income ratio.
|
| Average interest rates in 2007 were 6.34% vs ~2.80% today. [1]
|
| * 6.34% / $2,000 monthly payment / 20% down (~$65k) >> $328,319
| price of home
|
| * 2.80% / $2,000 monthly payment / 20% down (~$98k) >> $489,794
| price of home
|
| Homebuyers will make purchasing decision based on their monthly
| mortgage payments, instead of the home price.
|
| When interest rates fall, the home's price goes up but the
| monthly payment can stay the same. Therefore, increases in home
| (and other asset, since lower bowering costs can drive
| institutional investment in assets higher and non-linearly)
| prices can be driven higher without any change in supply / demand
| dynamics.
|
| Some hypotheticals to consider:
|
| * as rates approach and touch 0, what will drive up home prices
| then?
|
| * what happens when rates go up?
|
| [1] http://www.freddiemac.com/pmms/pmms30.html
| fcsp wrote:
| This is something that has been keeping me wondering for years.
| Since the financial crisis the European Central Bank has
| basically fixed base rate at negative (since 2012), leaving the
| market flooded with desperate investment money (due to all old
| school investment options becoming a negative) Now also of
| course since it's "cheap" the real estate prices have almost
| doubled in that timespan, having previously hovered around the
| same mark for the ten years before that.
|
| What I wonder is - is there any way out of this curse of growth
| with all the money spent into those inflated prices at this
| point that does not mean complete economic collapse?
| moonchrome wrote:
| Japan like stagflation ?
| somehnacct3757 wrote:
| If you focus on mortgage payment instead of home price, you
| also need to take mortgage term length into account for a
| generational study. 30 year mortgages only came about in the
| 1950's. Before then the choices were typically 15 and 20 years.
| kimburgess wrote:
| While this is accurate, a more concerning secondary impact is
| the increased deposit. In Australia specifically, house prices
| are soaring. The most in-demand markets increases are currently
| ~$1200 _per day_ [1]. For many people their home is a more
| 'productive' than they are, greatly outpacing their own earning
| potential. Those who already have wealth can buy in, or
| continue to buy in and leverage themselves into the market as
| it skyrockets. Anyone not in this position is left to watch as
| the ladder disappears into the clouds.
|
| Shelter has changed from a base need to a commodity that's
| traded in a rigged system and the societal implications of this
| are frankly terrifying.
|
| [1] https://www.abc.net.au/news/2021-08-26/fact-check-are-
| house-...
| quantumBerry wrote:
| Raw land is cheap. Housing codes are what keep people like
| myself out of the housing market. If I could just dump a yurt
| on the land, or a cabin like our forefathers, then housing
| prices would be a total non issue. But a bunch of selfish
| NIMBYs are so scared of the poors building a yurt instead of
| a 2000 sq ft brick house for two people and a dog, they'll
| never allow it.
| travoc wrote:
| There are plenty of trailer parks all over the country that
| will let you plop your yurt down and even plumb it in to
| local utilities. You may not enjoy your neighbors very
| much.
| game_the0ry wrote:
| Increasingly those trailer parks are being bought by
| private equity and institutional investors.
| spaetzleesser wrote:
| That assumes that people want to stay in debt forever. Decades
| ago you could quickly pay off your house but this is much
| harder now.
|
| Replacing affordable price and decent wages with cheap credit
| makes banks and companies happy but is a very bad deal for the
| little guy.
| nly wrote:
| Interest rates are irrelevant when you can only borrow 4.5x
| income but home prices are at 8-9x
|
| Interest rates are irrelevant when you need 20% down and it
| will take you a decade to save that up while renting, because
| of said multiple.
| llbeansandrice wrote:
| Why do people think you need 20% down? You don't need 20%
| down on a mortgage. There are first-time home buyer loans
| where you can put down as little as 0% and for conventional
| loans you just have to buy personal mortgage insurance if
| you're below 20% down.
|
| This is such a weird home buying myth and I don't understand
| how it sticks around.
| ubermonkey wrote:
| Yeah, this is how I bought. I looked at what sort of loan terms
| I qualified for (very favorable), and then figured out what
| price home resulted in a payment I was comfortable with.
|
| I'm pretty debt averse, so that resulted in me buying "less"
| house than the banks were willing to fund, but it was in the
| area I wanted, relatively new, styled to my taste, and from a
| reputable local builder, so from my POV I couldn't figure out
| why I'd buy MORE house.
|
| I still live there, 21 years later.
| Rd6n6 wrote:
| Regardless of the cause, I wish we could have nice trustworthy
| graphs that start the y axis at 0
| throwdecro wrote:
| > Homebuyers will make purchasing decision based on their
| monthly mortgage payments, instead of the home price.
|
| Which is crazy, right? People max out their "borrowing power"
| at low interest rates and take on huge loans, without
| considering that the declining interest rates that fueled past
| appreciation don't have much room left to move down, and that
| they'll be underwater on that huge loan if interest rates go
| up* and the value of the property declines.
|
| *EDIT: To be clear, I mean interest rates on _new_ loans being
| higher than they were before, not that the loan is variable-
| rate.
| jbay808 wrote:
| This is a way bigger problem in Canada, where fixed term
| mortgages are unavailable (and where price to income ratio is
| even more absurd than in the US).
| heavyset_go wrote:
| If anyone in the US thinks "housing costs can't keep
| rising, the market will correct itself", then just look at
| Canada. The average sale price of a home in the US is
| roughly $375k. In Canada, it is about $700k, and property
| values continue to rise.
| nostrademons wrote:
| As long as most people in the U.S. buy houses with 30-year
| fixed mortgages, the total cost of a house will be 30 * 12 *
| monthly mortgage payment. When interest rates are low but
| home prices are high, they don't pay any more over the life
| of the loan. (Someone who buys when rates are high but prices
| are low does have the option to refinance, though, which is
| not available to someone who buys when prices are high.) The
| change in interest rates effectively shifts which portion of
| the buyer's income goes to the lender vs. the seller.
|
| This is similar to how increases in local incomes are
| actually captured by landlords rather than workers. If
| housing is scarce and people need it to live, owners of that
| housing have the bargaining power to raise prices to capture
| available income.
| pjerem wrote:
| I don't know how it works in US but can't you just opt for
| fixed interest rates ?
| mandelbrotwurst wrote:
| Yes, most people do, it's just that increases in rates have
| a tendency to cause decreases in homes values because a
| larger proportion of monthly payments will now have to go
| towards paying the interest.
| lolpython wrote:
| Yeah, you can. A random example I found from Rocket
| Mortgage is a 3.25% fixed interest rate for a $200,000
| house.
|
| https://www.rocketmortgage.com/learn/30-year-fixed-
| mortgage-...
| [deleted]
| roland35 wrote:
| The standard mortgage in the US is a fixed rate 30 year
| mortgage. You can get lower rates for 10, 15, or 20 year
| mortgages. Also generally you pay an extra fee (PMI)
| monthly if you put less than 20% down. Adjustable rate
| loans and interest-only loans are still available but those
| are really not a good option unless you are not planning on
| staying in the home long.
|
| There are some other options out there for veterans or
| first time buyers, but those are the normal options.
| thaumasiotes wrote:
| Yes, you can, but it doesn't address the problem mentioned
| above.
|
| >> the declining interest rates that fueled past
| appreciation don't have much room left to move down, and
| that they'll be underwater on that huge loan if interest
| rates go up* and the value of the property declines.
|
| The price you can charge for something is related to how
| much other people can pay for it. If houses are usually
| bought with loans (which they are), then the availability
| of loan funding is a major influence on the price of a
| house. When funding is plentiful -- another way to say this
| is that interest rates are low -- the price of a house will
| be high. When funding is hard to find -- or interest rates
| are high -- the price of a house must drop to compensate
| for that.
| nostrademons wrote:
| In practice, when interest rates went sky high in 1980
| the price of home didn't actually drop very much.
| Instead, liquidity dried up. Nobody bought homes; nobody
| sold homes. The few people who _had_ to sell their homes
| got screwed, but in general people rarely _have to_ sell
| their homes unless they get transferred to a new office
| and don 't have enough to buy a house there in cash
| (which is very attractive when interest rates are high;
| when borrowed money is expensive, houses get cheap to
| match what you can borrow, and if you happen to have
| money, you just don't borrow and take advantage of the
| cheap prices to pay cash).
| lotsofpulp wrote:
| > Which is crazy, right?
|
| No, because this is not accurate:
|
| > Homebuyers will make purchasing decision based on their
| monthly mortgage payments, instead of the home price.
|
| Homebuyers make their purchasing decisions based on the
| options available to them. They are not paying $x because
| they can afford $x+1, they are paying $x because that is how
| much they are willing to spend on that specific house in that
| specific location. The latter portion of that statement is
| important because implicit in it is the competitive nature of
| humans, and so it manifests as people competing to purchase
| land and being _willing_ to pay as much as they can afford in
| exchange for the utility from that specific house in that
| specific location.
|
| That utility can be in the form of access to income
| opportunities to lower future volatility of income, access to
| other people of similar or higher income so your kids can go
| to school with their kids, access to airports, downtowns,
| outdoor recreation, etc.
|
| If you are projecting increased demand during your entire
| lifetime for the piece of land you are purchasing, then it
| makes sense to pay as much as you can afford, as it will only
| get more expensive. If you are projecting a receding economy
| and/or decreased demand for the land you are buying, then it
| does not make sense to pay as much as you can afford, but
| rather scale it to some measure of what utility you will get
| out of it.
| barneysversion wrote:
| > If you are projecting a receding economy and/or decreased
| demand for the land you are buying, then it does not make
| sense to pay as much as you can afford...
|
| I think this is the above commenter's concern; homebuyers
| are not adequately pricing the risk of rising interest
| rates. If interest rates go up, demand falls and you're
| left in a highly leveraged position that amplifies your
| losses. Monthly mortgage payments don't make the leverage
| apparent. Sticker price does.
| jbjbjbjb wrote:
| But if you go one move deeper central bankers will factor
| the high leverage in and therefore won't increase rates.
| hammock wrote:
| I have in my head the rule of thumb that you can afford a house
| 3x your annual income (or a mortgage 28% of your monthly[1]).
|
| I don't see the line crossing 3 anywhere on that chart.
|
| [1]Which translates to 4.2 on a 80/20 loan
| jobigoud wrote:
| > I don't see the line crossing 3 anywhere on that chart.
|
| The chart is for the average house, but the median income.
| Maybe the higher income are skewing the distribution of house
| prices.
| vessenes wrote:
| These charts are not very useful without taking interest rates
| and inflation into account; in fact you could almost use them to
| discuss interest rates and inflation, they are so intimately tied
| to housing prices and income.
|
| If housing interest rates stay low or drop, prices will keep
| rising. Absent wage inflation that ratio will go up.
|
| If inflation flows through to wages as it seems to be in process
| of doing, the ratio will stabilize or drop.
| [deleted]
| gp wrote:
| While it doesn't directly affect the average person's purchasing
| power, the same dramatic increase is happening in other asset
| values as well. [0] One interesting thing to note is that 2019 EV
| / EBITDA values were already "high," before the coronavirus was
| spreading.
|
| I suspect these two phenomena have different causes overall, but
| low interest rates are a common factor that cause all asset
| prices to increase.
|
| On the housing side, I suspect consumers purchase the house that
| their cashflow can comfortably support, not necessarily the one
| where they believe it is correctly valued, because the assumption
| that house values only increase means purchasing a well
| constructed house is almost never a "bad deal."
|
| I'm not sure what the "solution," is, but knowing that voters
| hate when their home values fall does not give me confidence that
| prices will decrease in the long term.
|
| [0] https://www.statista.com/statistics/953641/sandp-500-ev-
| to-e...
| useful wrote:
| Home prices are a function of monthly costs. As much as people
| want to compare the value of a home from year to year, in every
| instance, I've seen values reflect to monthly spending power.
|
| I would love to see some estimate that takes more into account
| like household income, tax breaks, and interest rates. If I
| have a interest deduction, my relative taxes are lower. If I
| have children, my taxes are lower. If I have historic property,
| my taxes are lower. If I have solar, my monthly bill is lower.
| All these things make owning a home easier and allows people to
| buy more home.
|
| Education is another example, prices largely mirror federal
| subsidized loan values. I'm not arguing that government should
| get out of housing, people should realize that the value of
| something is relative to the demand especially when the supply
| is largely fixed or has linear growth.
| wtvanhest wrote:
| I agree with your comment, and just want to add that interest
| rate changes alone can explain a lot of the appreciation.
|
| If you have the exact same income and rates are at today's 3%
| vs 2008's 6%, the payments on a $1.0MM home mortgage would be
| $4.2K vs $6.0k. The difference between those two payments is
| about $40k/year of gross income difference.
|
| A person in 2021 with the exact same income as 2008 would be
| paying the same for a $1.4M mortgage per month as the person
| in 2008 at a $1.0M mortgage.
|
| I don't own a home, so I'm not saying this to justify my
| purchase, but if I just take the info in the graph, I
| actually wonder whether there is a lot more room to go in the
| market. I wonder if we are looking at another 20-30%
| appreciation before the top?
|
| I have no idea.
|
| https://fred.stlouisfed.org/series/MORTGAGE30US
| shados wrote:
| I don't have all of the math for all the scenarios you
| describe, but still, overall you're completely correct.
|
| If you account for inflation and interest rates, and look at
| median home price, a home earlier this year was CHEAPER than
| home in 2005. Roughly the same monthly payments before
| accounting for inflation, because of the interest rates (6.X%
| vs 2.5-2.8%ish). That alone makes a huge difference.
|
| People are also becoming more financially literate. Once
| folks are able to crunch all of the numbers on their own,
| start calculating how much rent costs, how much money they
| will make from asset valuation, how much they can save from
| using HELOCs instead of credit or other types of loans,
| they're willing to spend more, too. There's the tax
| deductions, but that got gutted, so it's not that big
| anymore.
|
| one can say the down payment increases, but it increased
| slower than the market did, so if you just sat on investments
| since 2005, you can make a BIGGER down payment now than then,
| proportionally. At current interest rates, even with PMI,
| you're potentially better off doing a 3% + PMI than putting a
| large down payment (unless you're expecting a market
| apocalypse the likes of which the US has never seen).
|
| We could crank up the interest rates to 10% and home values
| would tank. It wouldn't reduce monthly home costs any though.
| pfisherman wrote:
| This jibes with my experience of buying a house about 6 months
| ago.
|
| My reasoning was that we were experiencing rapid asset
| inflation fueled by low interest rates and COVID stimulus, and
| our cash was losing its value relative to housing by the month.
| I figured that this propping up of asset prices is likely to
| continue, as any administration that lets housing / 401k values
| collapse will get massacred in elections.
| splistud wrote:
| People are working, unemployment has been falling like a
| stone since 2017. That money is going to go somewhere (and
| for most that is not 'the bank'). It's going to get spent or
| put into investments. We're going to continue to see strong
| commodity prices (and most of these have been rising into the
| headwind of a stronger dollar) until unemployment creeps up,
| or real wages falls too far behind inflation rate. I think
| the increased commodity supply that would normally rebalance
| pricing before demand does is going to be delayed. Why?
| Though interest rates are low, loans aren't going into
| commodity capital projects (because risk and returns ratios
| don't look good to lenders when compared to inflation rate?
| not sure).
| munk-a wrote:
| I think there is an issue with that logic - it doesn't
| account for the ever accelerating wealth inequality. People
| are working a ton right now - and creating massive amounts
| of value. It's so freaking easy to get consumer goods
| delivered next day that we're all forgetting that this
| service would likely cost fifty+ dollars in the early 90's
| - there are similar trends across the economy.
|
| The issue is that a lot of that created value is being
| isolated out of circulation and is pooling in investors
| that can, at a moments notice, pull the rug out of a number
| of great companies if they sense a panic. Wealth inequality
| creates the opportunity for instability in the form of
| extreme sudden market rushes alongside reducing the
| purchasing power of most folks. We're in a rough spot.
| splistud wrote:
| Very complex situation, and we likely agree on some of
| it. I won't rehash that part. Some seldom-described (or
| taboo) opinions: Part of the dislocation (behavior
| inconsistent with historical macro economics 101) is
| caused by dollars exiting the system faster than they
| used to. Remember the graphics/vids we all saw of people
| passing dollars around the community and the total supply
| expands? Now, good portions of those dollars are
| naturally shunted out of our system to where the
| manufacturing took place. Worse, some of the money in the
| graphics that went to Bill's hardware store disappears
| (because Bill's store is still in town, but he has a
| subsidiary in a foreign country and captures most of his
| revenue there).
|
| Then there's income inequality. In addition to the
| depredations of two generations of greedy bastards, we
| have to understand that we import (legally or not) way
| too much unskilled/lowskilled labor, and that this has a
| negative affect on the entire bottom half (more-or-less)
| of the wage structure in our nation. It has a salutory
| affect (though i think one that is smaller than some
| imagine) on the top half, in that pressure on wages for
| unskilled to middling skilled workers results in more
| return on work and investment at the top of corporate
| structures, and other fields that compete with them for
| talent.
| johntiger1 wrote:
| Why not invest in the market then?
| throw_nbvc1234 wrote:
| Two, somewhat hypothetical questions, I'd have to answer
| first.
|
| What would happen to the if everyone suddenly agreed that
| there was a hard-cap to how much the global economy can
| grow; Especially if that cap was somewhat near to where we
| are today?
|
| How do you solve the core problem of "climate change"
| (which I'll define here as the unsustainable use of natural
| resources) without essentially implementing a hard cap of
| the global economy. This question isn't just about
| electricity versus oil. It's about trash, disposable (or
| planned obsolescence) consumer goods, fish/wildlife,
| forests, ect...
|
| You could interpret the change in climate is just a single
| symptom of this runaway train. And any effort to pull the
| brakes is likely to cause the whole train to derail and
| crash. Maybe we'll make it to mars before then. Or maybe
| there will be a massive decrease in human life (war or
| another pandemic) and this whole question will solve
| itself.
| mywittyname wrote:
| You can do both. But housing has the benefit of high
| leverage-to-cost ratio.
|
| One can get 20% leverage at ~4% on a stock portfolio.
|
| One can get 2000% leverage (5% down) at 2.9% on a house.
|
| Granted, the leverage on the house requires paying interest
| and 1/3600th of principle each month. But, unlike the stock
| portfolio, it's not callable.
| shados wrote:
| The math for this ends up being extremely complex. The
| leverage is one part, and a big one. You have to account
| for closing costs (especially when selling), and
| uncertainty around how long you'll stay. But you could
| theoretically rent it out. But as we've seen, some cities
| could keep an eviction moratorium going and that could be
| costly. Housing in some areas skyrocketed in values, but
| you could be buying a lemon since "no inspection
| contingency" is the norm in hot markets. Taxes and HoA
| fees can go up a fair bit too, and there's maintenance.
| There's a few psychological factors that don't factor in
| the math, like how you may do renovations that don't
| translate 1:1 to home value that you wouldn't do if
| you're renting. On the other hand, rent does go up,
| generally faster than property taxes.
|
| It's really a toss up based on a lot of variables, but
| generally, yeah, home ownership will come up ahead. Not
| always though. While if you invest in a total market
| index, you're main risk is the entire country tanking,
| it's different with a home. You're gambling on that ONE
| PARTICULAR HOME in one particular place. That's a lot
| riskier than an index fund.
|
| But you get to make holes in the walls without anyone
| yelling at you, and that's a big plus.
| yazaddaruvala wrote:
| What would be great are hyper-specific REITs.
|
| e.g. I want to "own land" in Seattle so I'm never priced
| out, but averaged across the city so there is no single
| point of risk. With the added benefit that I can add
| capital in small increments.
|
| If such a REIT were structured as a COOP that would be
| even even better from my perspective.
| dpweb wrote:
| When it's all assets going up, it's not the assets cost more,
| it's the dollar is worth less. So for all the help and
| assistance. Housing is LESS affordable than ever before.
|
| You cannot infuse trillions of extra dollars into the economy
| without inflation. There's no magic pill - there must be
| consequences.
| greesil wrote:
| You can if you're in a liquidity trap. Question is, are we in
| one now?
| robocat wrote:
| I imagine creating cash to solve a liquidity trap is like
| continuously taking laxitives for a constipation problem...
| At some point you get a different problem!
|
| On topic: my experience of housing prices in NZ is that
| people bid up house prices to the point that they can only
| just afford the mortgage payments.
|
| Creating more housing doesn't "fix" the problem, because
| the more wealthy buy two or more houses, and are happy to
| leave one empty. I've left a house vacant in a tight rental
| market because the hassle of a tenant was not worth the
| risks for me (possible gain was a very small percentage of
| my income).
|
| I am in New Zealand, and New Zealanders bid against each
| other in an almost zero-sum game for the properties that
| exist... We are borrowing from overseas to pay for it, so
| most New Zealanders gain nothing and global finance is the
| real financial winner.
|
| Yet, politically the game is difficult to change... We have
| a left leaning party strongly in power, and they are
| struggling to create a more level playing field so that
| people can afford to get a home (rather than pay rent,
| which is more expensive than a mortgage).
|
| Edit: also we can only lock in fixed interest rates for up
| to 5 years and most people only lock in for 1 or 2 years
| because short term rates are cheap - the 30 year mortgage
| system is completely foreign to us.
| greesil wrote:
| Wrong liquidity.
| munk-a wrote:
| Even when the world ran on the gold standard not all value
| was actually backed by anything - now we're not even close.
| You can pick a stick up off the ground and whittle it into a
| boat - you have, by doing so[1], made the dollar worth
| slightly more since, for all the dollars in existence, there
| are now more goods to purchase. Inflation is spurred to
| increase over time for a variety of reasons - but asset
| accrual is not one - in actuality all the houses people own
| are constantly depreciating while the land they're built on
| continues to gain value from age - they gain value from the
| increased shortage of supply - and they gain value from the
| constantly increasing cost of building houses (labour and
| materials - the material increase mostly also due to labour).
|
| There are some incredibly complex feedback loops in the
| economy - especially in the housing market - but inflation
| isn't the issue for most first home buyers. Inflation does,
| however, hit people with savings harder - every dollar you
| have in a savings account is slowly losing value. That,
| however, is quite intended since savings accounts are poor
| tools for economic growth (banks can leverage the value for
| loans but there are more efficient investment methods - and
| that leaves us with all our eggs in one basket which might be
| a quite irresponsible bank that's pumping out subprime
| mortgages).
|
| 1. In a very very infinitesimally unmeasurably minor manner.
| mywittyname wrote:
| > 1. In a very very infinitesimally unmeasurably minor
| manner.
|
| Great point. And to explicit what you're alluding to: we
| live in a world where factories around the world are
| running 24/7 producing trillions of items with
| infinitesimally small values relative to global wealth. But
| none-the-less, these goods at up to real value.
| throw0101a wrote:
| Lots of money supply in Japan, and are their asset prices
| going up?
|
| * https://fred.stlouisfed.org/series/MYAGM2JPM189S
|
| Their central rate has been <1% since 1995.
|
| Stocks and equities in the US have been going up for 10+ and
| the infusion of "trillions of extra dollars" wasn't present
| for all of those years. Canada has had increasing home
| prices, barely slowing down in 2008, and it hasn't had QE.
| b9a2cab5 wrote:
| Japanese asset prices would otherwise be deflating, so the
| "infusion" has absolutely had an effect.
|
| The CAD has tracked the USD pretty closely in terms of
| value so even if there wasn't explicit QE there was
| definitely sufficient inflation to devalue the Canadian
| dollar.
| ItsMonkk wrote:
| Lyn covers this topic fairly well in her article on
| Japan[0]. In short, private debt in Japan has shrunk by 300
| trillion yen over the past 25 years. The growth of the
| money supply is all coming from public debt.
|
| It matters who gets the new money and what they spend it
| on.
|
| [0]: https://www.lynalden.com/economic-japanification/
| [deleted]
| blake1 wrote:
| Do you mean fiscal policy? You absolutely can infuse
| trillions of dollars into the economy without causing
| inflation after the economy takes a $4T hit from a pandemic;
| the government spending will be what prevents disastrous
| deflation.
|
| People worry about inflation, but forget how awful deflation
| is.
|
| (And on a side-rant, it's really bizarre how the
| hyperinflation of Weimar Germany is cited as enabling the
| rise of the Nazi party. The timing doesn't work. They came to
| power during the depression-era deflation.)
| hcurtiss wrote:
| I've never understood how deflation could ever be a concern
| in countries that print their own money. Can you not just
| print your way out of it every time?
| whimsicalism wrote:
| Political constraints around central bank policy.
|
| Or really strong deflationary market expectations, for
| whatever reason.
| lotsofpulp wrote:
| Not if you need to import anything, since you can inflate
| your currency all you want, but the world will deflate it
| relative to other currencies.
| the_gastropod wrote:
| I know this is a common belief in the hilarious world of
| crypto enthusiasts. But, y'know, we measure inflation, and
| what you're suggesting is just flat out not true.
| https://tradingeconomics.com/united-states/inflation-cpi
| markus_zhang wrote:
| It's more like inflation of asset prices.
| the_gastropod wrote:
| I take much less issue with _that_ assertion. That high
| housing prices are because _the dollar_ is worth less is
| what I find rather absurd. Inflation is measurable. And
| you have to embrace some real quacky conspiratorial
| thinking to go down the rabbit hole that dpweb seems to
| have gone down.
| larksimian wrote:
| Inflation is not just about measuring prices. It is a
| really complicated number synthesized from both price
| signals(arguably the most objective data), surveys and
| ... educated opinions. For instance, economists just
| kinda have to put a number on what new technologies are
| worth. Modern car maybe costs more dollars, but you're
| also getting a better product type issues.
|
| Inflation is based both on measurements and on judgement
| calls by economists responsible for calculating it. It's
| more objective than LIBOR or some crap, but (way way)
| less objective than the price of something on the stock
| market, or some other pure price signal.
|
| 'Asset' inflation isn't even part of CPI(like stock, cost
| of owning a house, tho rental is), is it? It's not even a
| claim to say that the dollar is devaluing against assets,
| it's just like tautologically what it means that asset
| prices are booming.
| the_gastropod wrote:
| > It's not even a claim to say that the dollar is
| devaluing against assets, it's just like tautologically
| what it means that asset prices are booming.
|
| Yep. This is true. The issue is that the OP seemed to
| suggest that the price of assets (e.g., housing) was
| _wholly explained_ by the devaluation of the dollar.
| willcipriano wrote:
| That's CPI, not inflation. CPI has a number of ways that a
| thumb may be put on the scale, for example hedonic quality
| adjustments seem to me to be highly subjective.
| the_gastropod wrote:
| Right, vs _REAL_ inflation, which is measured by whatever
| I think happens to be too expensive right now.
| quickthrower2 wrote:
| Cheap TVs but have to rent forever, landlord caused
| cockroach infestation to get me to leave rent control.
| But a 720p TV is cheap!
| willcipriano wrote:
| I mostly just look at the money supply. Print 10% more
| money, that's 10% inflation. It may not be uniform
| throughout the economy, or take effect immediately but
| that's 10% more money chasing the same assets. It's all
| has to go somewhere.
| whimsicalism wrote:
| Velocity effects are extremely important.
|
| https://fred.stlouisfed.org/series/M2V
| haskellandchill wrote:
| Money supply in theory is chasing actual economic effects
| such as growth, so your view of just one side is not very
| meaningful. The flaw is in considering assets static.
| willcipriano wrote:
| To some extent sure but were 2020 and 2021 boom years in
| terms of productivity, because they were certainly boom
| years in terms of money printing.
| throw0101a wrote:
| > _Print 10% more money, that 's 10% inflation._
|
| No: If you're approved for a $100K loan, you are credited
| with $100K balance to draw from your account, and the
| money supply is recorded as going up by $100K.
|
| But if you don't withdraw any money from the account
| (e.g., a HELOC that you intended only for emergencies),
| then how can it be inflationary if it's _not circulating_
| in the economy? _But it is registered as increased money
| supply._
| noduerme wrote:
| Do a lot of people take out loans they never use? If you
| get a loan to buy a house, the seller gets the money
| immediately and uses it to buy another house. You've just
| put a whole house's worth of debt into circulation.
| munk-a wrote:
| What is the actual money supply though - if I earn 1k and
| put it in a bank and it gets loaned out to someone else
| is there now 2k in circulation since my money is insured?
|
| Only a teensy tiny portion of "value" in the economy is
| actually on printed bills - but even the abstract value
| we can track won't tell the whole story.
| epistasis wrote:
| One note, is that bank loans are not taken from deposits
| anymore, that story we were told as children does not
| reflect modern banking. There's not even "fractional
| reserve" so much anymore, just "stress tests." So banks
| really do own a printing press when it comes to money,
| which is sometime called horizontal money, as opposed to
| the "vertical" money that comes from a monetary
| sovereign.
| the_gastropod wrote:
| This is just incorrect. Value is added to the economy
| every day. Take the home you're living in. That probably
| did not exist 100 years ago (and if it did, it certainly
| wasn't as nice as it is today). That's new value, and
| having money in circulation to correspond to that value
| makes perfect sense.
| lazide wrote:
| When a couple markets in housing are going up like crazy?
| Sure. When essentially all asset classes or supply
| constrained service/goods globally are going up
| everywhere at record rates? It's hard to not see the need
| to at least consider it. Especially after the massive
| amount of money printing still ongoing.
| helen___keller wrote:
| > On the housing side, I suspect consumers purchase the house
| that their cashflow can comfortably support, not necessarily
| the one where they believe it is correctly valued, because the
| assumption that house values only increase means purchasing a
| well constructed house is almost never a "bad deal."
|
| I'd agree with this. I think housing in my area is wildly
| overpriced, but I still bought a 100 year old condo for a solid
| million. Compared to renting, I got double the space, plus
| parking, plus a private garden, plus an outdoor patio, and my
| monthly costs went up about 25%.
| galangalalgol wrote:
| Is there a difference in the property tax there for
| multifamily vs single family dwellings? Around here people
| pay almost double their mortgage in property taxes for a
| single family dwelling, but landlords have managed to get
| much lower taxes for multifamily dwellings.
| helen___keller wrote:
| In my municipality I'm not aware of a difference between
| multifamily vs single family, but there aren't many single
| families anyways. Property tax is absurdly low, with a very
| nice deduction for owner-occupied units. My effective tax
| rate is around 0.3%
|
| (Municipality: Cambridge, MA)
| madars wrote:
| Cambridge is atypical: it has tons of biotech, FAANG
| offices, etc to tax, so the city ends up having one of
| the lowest residential property tax rates in the state.
| In fact, Cambridge's residential rate is almost 2x less
| than those of each of its neighbors (Arlington, Belmont,
| Boston, Somerville, Watertown. https://joeshimkus.com/MA-
| Tax-Rates.aspx)
| helen___keller wrote:
| yep, and to GP's point when i was looking for housing, my
| budget was higher in cambridge for precisely this reason
| shados wrote:
| It depends where, as cities have some level of freedom in
| the shenanigan they implement in their tax structure.
|
| Normally though, taxation is just a matter of the property
| value. Often, cities with lower housing cost have higher
| tax rates (because the people working the sewers aren't any
| cheaper and they need to get paid).
|
| Many cities also have owner occupant or primary residence
| abatements, so the landlords pay more in taxes than the
| resident owners. Some cities though split homes in one of
| several categories, and single families may be taxed
| differently from multi family or condos. Sometimes multi
| family and condos are taxed less to encourage higher
| density construction, but it wouldn't change anything if
| you're a landlord or not (aside for the tax abatement).
| Landlords can deduct some of their expenses from their
| business' taxes though, and I think (don't quote me) their
| property taxes are part of that. Your millage may vary.
| lotsofpulp wrote:
| > Normally though, taxation is just a matter of the
| property value.
|
| Total tax burdens are a function of government
| expenditures. Property tax is a rough attempt at scaling
| the tax burden to a person's wealth, but it has many
| caveats varying in many jurisdictions. However,
| government debt is a big part of expenses, and each city
| and state's debt can vary greatly than from another.
|
| Here is a good website ranking the big cities and all the
| states:
|
| https://www.truthinaccounting.org/news/detail/financial-
| stat...
|
| https://www.truthinaccounting.org/news/detail/financial-
| stat...
|
| I would expect cities and states where the per taxpayer
| debt burden is a standard deviation or more from the mean
| to have measurably higher taxes and/or fewer government
| services/investments.
| itake wrote:
| I suspect that dual income families could be a contributing
| factor in increased home prices of single-family homes.
|
| Even 'worse' is dual income, no kid families that are delaying
| and skipping child costs. Thus with "double" the cash flow and
| shared costs, couples afford higher prices at a lower cost.
| alexpotato wrote:
| I've often wondered about this myself.
|
| E.g. it's a lot easier to have two working people in a couple
| make $300K total vs only one person making $300K. It would be
| interesting to go back in time and correlate the rise of dual
| working couples vs housing prices adjusted for other factors
| e.g. inflation
| itake wrote:
| At least in tech hubs, the "one person making $300k" is
| marrying up with another person that makes $300k, resulting
| in a $600k household and $1-3M home prices.
| wombatpm wrote:
| Which then leads to the dual income trap.
| shados wrote:
| Yup. Don't forget the whole "frequently choose not to
| have a kid" part, and it becomes extremely one sided.
| Dual income families aren't new, but 2 high earners
| professionals with no kids aren't just the occasional
| doctor/dentist/lawyer couples anymore.
|
| I'm a software engineer myself in one of the high paying
| tech hubs, and married the same. When we went to look for
| a home and toured open houses, all you saw were pairs of
| young couples wearing Google, Microsoft and Facebook
| swags. Sure, I didn't personally ask every single one of
| them where they worked, but I'd venture that a non-zero
| amount of these couples were "Tech DINKs", like us.
|
| The average person simply can't compete with that. Add
| that in the urban areas these folks are less likely to
| want a big car, some may be happier playing Final Fantasy
| 14 during vacations than traveling across the world (I
| know plenty of travelers, but there's certainly a lot of
| "low cost" vacationers in the industry), and some level
| of financial literacy (common for people who get
| compensated with RSUs), and it's absolutely one sided.
|
| With that said, median home prices have only increased a
| little faster than inflation. When you account for
| interest rates tanking + inflation, a median home in 2021
| is the same price and sometimes cheaper than it was in
| 2005 (data for the last few months is harder to find, and
| there's been a unusual spike, so it may not be quite true
| right now, but it was just a few months ago).
|
| The bigger problem is that everyone wants to live in the
| same place (usually in urban centers, where the jobs are,
| and where you don't have to drive an hour and a half to
| work). So prices where people want to be have increased
| higher than median.
|
| I'd expect people are more ok with paying a larger
| portion of their income to live where they want to be.
| Even as extremely high earner DINKs, housing will eat up
| a good chunk of our cash flow if we feel like blowing it
| all to live in Manhattan in a condo that doesn't suck.
| mywittyname wrote:
| The amount a household can spend on housing scales at a
| faster rate than income. Say, a family is making $2000 a
| month with one person working, and spending $800 on housing.
| If another person goes to work making $2000 -- spending,
| maybe $300 in work-related expenses, gas and such -- that
| household now has $800 + $1700 = $2500/mo available to spend
| on housing, while maintaining an otherwise similar standard
| of living.
|
| So doubling of income tripled the amount that could be spent
| on housing.
|
| But wait, there's more. People buy housing with debt, and a
| doubling of the monthly payment on a mortgage more than
| doubles the price that can be afforded. So that household
| paying $800/mo could move from their $195k house into a $600k
| house with a $2500/mo payment.
|
| So, a doubling of income has the potential to increase the
| amount of house a household could afford by six. Granted,
| this ignores things like taxes, and most people don't spend
| their entire raise on housing. But this fact is probably what
| helped drive prices in places like California into the
| stratosphere.
|
| The crux of the problem is probably that income follows a
| roughly pareto distribution. When housing is limited, the
| poorest households drop out of the market. And when
| populations grow but a town doesn't, housing gets bought by
| people higher up in the income distribution curve. And past
| median, incomes climb quickly.
|
| If you have 30k houses, in a town with 60k people, then
| housing will be affordable to a median income. But if the
| population grows to 120k, but housing doesn't, then only the
| top 75% of households can afford a house. Median income, to
| top 75% is a huge jump.
| marcusverus wrote:
| This seems unlikely given that the share of dual income
| households has been flat for 30 years.
|
| https://www.pewresearch.org/ft_dual-income-
| households-1960-2...
| whimsicalism wrote:
| Seems dumb to be conditioning on married couples. My
| parents were unmarried dual income earners. I likely will
| end up being the same.
|
| Given that long-term unmarried couples are both increasing
| in number and (I believe) more likely to be dual income,
| this tells the opposite picture.
| brendoelfrendo wrote:
| This is something that Elizabeth Warren and her daughter
| Amelia covered in their book "The Two Income Trap." I'm aware
| that recommending a book by a political figure is fraught,
| but I'm not aware of any economists who took umbrage with the
| claim, either. They make the observation in chapter 1 that
| "Even as millions of mothers marched into the workforce,
| savings declined, and not, as we will show, because families
| were frittering away their paychecks on toys for themselves
| or their children. Instead, families were swept up in a
| bidding war, competing furiously with one another for their
| most important possession: a house in a decent school
| district."
|
| Housing is a great way to establish a level of security for
| your family and kids; but there's a finite number of houses
| with proximity to good schools, jobs, and other necessary
| resources, and so families needed to dedicate larger and
| larger portions of their income to compete against other
| dual-income families that were bringing new money to the
| housing market.
| elihu wrote:
| > Housing is a great way to establish a level of security
| for your family and kids; but there's a finite number of
| houses with proximity to good schools, jobs, and other
| necessary resources, and so families needed to dedicate
| larger and larger portions of their income to compete
| against other dual-income families that were bringing new
| money to the housing market.
|
| One way out of that is simply to increase the supply of
| desirable neighborhoods. The number of those are finite,
| but can be increased. The hard part is how to do it?
|
| Sometimes I like to imagine there existing something like
| Kickstarter but for cities. You get a few thousand people
| that want to build a house but can't afford land, a handful
| of employers, and maybe a University that wants to
| establish a new branch and they pool their money and buy a
| couple square miles in the middle of nowhere. They divide
| it into lots and start building. Property values rise, and
| as that happens leftover lots get sold to finance
| construction of infrastructure, schools, fire departments,
| and so on.
| shados wrote:
| I've thought about this a lot, though if you google around
| you'll find people who dispute this claim. Still, it makes
| sense to me.
|
| If you have single income households, and all of a sudden
| everyone's a double income households, you're not any
| better off. You'll get inflation, especially in housing.
| People will point out that stay at home moms weren't THAT
| pervasive, even decades ago (not as pervasive as us
| younglins would think), and that may be correct, but double
| professionals as a common thing is still more recent. We're
| making some (slow) progress toward wage equity on top of
| all of it too. That's a good thing, but it doesn't change
| much when people are bidding against each other.
|
| But all things are not equal: It's not as simple as "back
| then it was 1 income families against 1 income families and
| now its 2 vs 2".
|
| Not at all! Now you have 1 income families, 2 income
| families, 2 income families with no kids, 2 income families
| where both are software engineers, etc. All of these always
| existed in some form, but now it's very visible.
|
| If my partner and I (we're DINKs, both in software
| engineering and highly successful) go to bid on a home, and
| a single working parent with a partner who stay at home,
| and 3 kids, try to outbid us... Well, let's hope for them
| that the single earner is a world famous neurosurgeon, else
| they're not getting that home.
| whimsicalism wrote:
| > If you have single income households, and all of a
| sudden everyone's a double income households, you're not
| any better off. You'll get inflation, especially in
| housing.
|
| ?? The growth in output would offset the increase in
| dollars bidding for the same goods - ie. more people
| working would mean more supply and also more $$ bidding
| for goods.
|
| Seems absurd to say "you're not any better off."
| fancifalmanima wrote:
| I'm not going to say that the larger number of women
| entering the work force has had no effect on home prices,
| however even if it did it's not necessarily a net
| negative. A larger workforce leads to more economic
| output, more innovation (there are countless innovations
| that have probably failed to be made over the generations
| due to the impact of women not working) that leads to
| quality of life improvements, productivity improvements,
| price drops, and other improvements. Food as a percentage
| of income has dropped dramatically over the years. Same
| with technologies like computers and home appliances.
| Houses are also way bigger than they were decades ago.
|
| I live in a 2 income house with a kid, I'm not sure that
| the alternative (considering the economy as a whole and
| not just home prices) is actually preferable.
|
| It's also probably pretty difficult to disentangle the
| effect on home prices from more women working from the
| effect on home prices from other things like low interest
| rates. There's likely not a single cause for this, but
| rather an outcome of some aggregate of causes. It's
| entirely possible that more women working does increase
| home prices some, but that it's only some fraction of the
| overall increase we've seen, and that families come out
| ahead on this economically by a wide margin. Especially
| taking into account the aggregate effect a larger labor
| force has on output and productivity.
| shados wrote:
| It's definitely not a negative and I'd pick a fight if I
| met someone face to face who said it was. I 100% agree
| with all of the benefits you outlined, and totally
| believe it's worth it.
|
| I'd also not focus too much on the "women entering the
| work force", because that's only one part of it, and not
| even the biggest part. More families not having kids,
| fewer families supporting their parents, more complex
| family structures in general, etc all impact it.
|
| I also don't think it has a significant impact on home
| price. After all, when accounting for inflation and
| interest rates, home price is not up by that much.
| Depending which periods you compare it to, it may even
| have gone down.
|
| What it changes, is the dynamics of bidding wars in low
| supply areas, which is a lot more specific, and is
| generally what people talk about on social medias. The
| whole "Omg this home went 100k over asking!" shock
| factor. Again, adjusted home prices didn't go up that
| much at the median. It's specific homes in specific areas
| that are skyrocketing.
|
| There's not many alternatives beyond increasing supply. I
| always like to contrast it with raising the level cap in
| an MMORPG. Everyone who quickly maxes their level after
| an update is back to square 1, all being the same. But
| the person who just started playing is at a huge
| disadvantage. It may be specific, but for readers
| familiar with Final Fantasy 14, if you start the game
| fresh today, you're in for hundreds of hours of catching
| up...It's very similar to the economic situation we're
| discussing.
| xnx wrote:
| I appreciate this effort since this gets closer than reporting on
| house prices alone. As other's have pointed out there are a lot
| of significant factors being left out (e.g. interest rates). One
| of my favorite analysis is the historical chart on how many hours
| you had to work for an hour of artificial (candle, lamp,
| electric, etc.) light. I'd love to see this applied to housing,
| though housing is extra difficult because the quality has also
| changed immensely (indoor plumbing, electricity, etc.).
| gruez wrote:
| >As other's have pointed out there are a lot of significant
| factors being left out (e.g. interest rates).
|
| >though housing is extra difficult because the quality has also
| changed immensely (indoor plumbing, electricity, etc.).
|
| This blog goes over both those points.
| https://awealthofcommonsense.com/2021/03/what-if-housing-pri...
|
| tl;dr:
|
| 1. inflation adjusted mortgage payments are actually down
|
| 2. houses have gotten much better since a few decades ago.
| xnx wrote:
| Great analysis! Thank for sharing that link.
|
| > 2. houses have gotten much better since a few decades ago.
|
| I'm sometimes reminded of this when I see old footage of
| shows like "Lifestyles of the Rich and Famous". Many mansions
| from the 1980's kind of look like dumps.
| AndrewDucker wrote:
| Copying a link from a mysteriously dead comment below:
| https://www.corelogic.com/intelligence/comparing-two-home-pr...
|
| You _have_ to take interest rates into account. The amount you
| pay, monthly, for a mortgage of the same size is very different
| at different interest levels.
|
| What people care about is their monthly mortgage payment - that's
| what makes a home affordable or not.
|
| (Which isn't to discount that downpayments are a percentage of
| home cost, and that's pricing people out of being able to buy
| anything at all, even something they can easily make repayments
| on.)
| zargon wrote:
| Does this mean that when interest rates go up, home values may
| drop, leaving people underwater?
| AndrewDucker wrote:
| Absolutely.
|
| Although it's more likely that they'll just remain stagnant,
| which would be just fine.
| nwiswell wrote:
| People being underwater happens to mean that the banks have
| bad loans. We have seen that movie before.
|
| Interest rates will not be allowed to increase faster than
| the property market can absorb. You can count on that; the
| political imperative could not be more clear. The next
| crisis will probably be some novel flavor of financial
| recklessness.
| KingMachiavelli wrote:
| Exactly and the market is confident the the government
| would intervene to prevent another housing market
| collapse which just compounds the effect further.
| RcouF1uZ4gsC wrote:
| One thing this ignores is interest rates and availability of
| credit.
|
| The biggest determinant of homes people buy is not the total
| price, but rather how much cash do they need for down payment,
| and what will the monthly payment be.
|
| With low interest rates and increased credit availability ( you
| don't need 20% down payment in many cases now), people on the
| same income are actually able to buy a more expensive home.
|
| I think looking at monthly mortgage payments to income ratio over
| the long term might actually be more informative.
| leetcrew wrote:
| > The biggest determinant of homes people buy is not the total
| price, but rather how much cash do they need for down payment,
| and what will the monthly payment be.
|
| I agree this is mostly how people decide, but it's not
| necessarily a good idea. buying a very expensive home at
| historically low interest rates is a significant risk. there's
| a good chance you get upside-down on that loan over a 15-30
| year period. better hope you don't get divorced, lose your job,
| or need to relocate during that period.
| rektide wrote:
| Agreed. As much as any other factor, that anyone with a bit of
| money can now buy an expensive house feels like the thing
| making the housing prices go up. (As well as our general
| inability to build.)
| bogomipz wrote:
| Can anyone explain what the cause of the steep cliff drop in the
| first graph that occurred between 1953 and 1959 might have been?
| Would this be the postwar suburban building boom driving down
| prices? Something else?
| Jerry2 wrote:
| RIP American Dream.
| jdavis703 wrote:
| I wouldn't say we're in a bubble, even though the numbers look
| like the last bubble. At least in my local market there's a small
| number of home sales being distorted by a handful of people at
| the top of the income distribution.
|
| What we're seeing is a lack of housing, not middle class people
| buying up housing they can't afford.
| lastofthemojito wrote:
| I've heard 3x income as a rule of thumb for how much house one
| can afford, but it looks like that's never been widely followed.
| It also doesn't make a whole heck of a lot of sense as interest
| rates have varied so widely - a better rule of thumb might be a
| ratio between the total amount of payments over the life of a
| mortgage and one's income.
| Glyptodon wrote:
| 3x income for your debt load or for the overall home cost?
| Either way it seems like it wouldn't really directly translate
| to a % of income as monthly payment.
| zzleeper wrote:
| Agree. From experience, people look into how much they would
| pay monthly and their income.
|
| This then begs the question: what will happen once rates go up
| even a bit, and houses suddenly require a 50% larger monthly
| payment.
| throwaway6734 wrote:
| Most mortgages haves fixed rates
| zzleeper wrote:
| Of course. But buyers still need to be able to afford
| houses they purchase. With higher rates that might not be
| true.
| rozap wrote:
| Does it matter? From an individual's perspective, if you
| can make the monthly payment then all is well. Sure, the
| market may tank but all that does is effect your ability
| to move.
| pureliquidhw wrote:
| New mortgages will need that extra 50% driving home values
| down due to future homebuyers having less "monthly"
| purchasing power.
| wheelinsupial wrote:
| Over what time period? I think I'm America you can get a 30
| year fixed rate mortgage. In Canada, 5 years is the most
| you can get even if the amortization period is 25-30 years.
| throwaway6734 wrote:
| In the US, 10, 15, 20, or 30 years in my experience
| [deleted]
| rootusrootus wrote:
| IMO the ratio depends entirely on your age. It makes a lot of
| sense for someone in their 20s to go for a 4x ratio (with
| caveats, such as fixed mortgage rates). It makes no sense at
| all for someone in their 60s.
| clipradiowallet wrote:
| The 3x income rule is usually mentioned by your loan officer,
| and your real estate agent. They will present you with houses
| costing 3x your income as a baseline of what you can afford.
| Fire-Dragon-DoL wrote:
| That's funny, you need to earn 250000/year to be able to
| afford _something_ in Vancouver by following that rule.
| __turbobrew__ wrote:
| or 600000/year for a starter home
| dbetteridge wrote:
| That rule does not work in Australia, Canada or the UK :D
|
| Median salary is about 80k AUD in Western Australia. Median
| house price is 840k.
|
| Even with 2 full time salaries of 80k your maximum would be
| 480k.
| jonas21 wrote:
| One thing not captured in this chart is that the average house
| size in the U.S. has nearly tripled since the 1950's.
| nostromo wrote:
| Not only are the houses much bigger but families are also much
| smaller.
|
| It also ignores interest rates. Unless you're paying cash, the
| price of a home doesn't really matter -- what matters is your
| monthly payment. If you bought a house in the 80s, a huge chunk
| of change every month went to bankers, not to principle. So the
| fact that you got a "cheap" house doesn't really matter,
| because you were still paying an arm-and-a-leg for it.
| autoliteInline wrote:
| Did I miss the part of the article that mentioned the average
| size of houses over time? The increasing code requirements over
| time?
| cudgy wrote:
| " an average single family house in the United States cost more
| than 7 times the U.S. median annual household income. "
|
| Why average numerator divided by median denominator?
| clipradiowallet wrote:
| This bears repeating:
| http://www.iedu.com/Documents/Manifesto1892.html
|
| That is a link to the banker's manifesto. The ideal scenario [in
| the manifesto] is for home prices to far eclipse yearly income,
| and for houses to be owned by banks instead of occupants.
| Everything old is new again...
| mint2 wrote:
| I'd be interested in seeing the total cost after accounting for
| interest in the loans, or monthly cost compared to monthly
| income. Most people don't pay cash, and they pay more than the
| asking price due to interest. So high interest rate periods look
| artificially lower because they ignore a substantial amount of
| the price
| thehappypm wrote:
| Very true. The 2008 housing bubble did not have low interest
| rates. 30 year average was around 6%. Now it's under 3%. That
| 3% makes a HUGE difference in purchasing power.
| gruez wrote:
| Exactly. https://awealthofcommonsense.com/wp-
| content/uploads/2021/03/...
|
| That said, it doesn't do much for down payment.
| throw0101a wrote:
| Corresponding post:
|
| * https://awealthofcommonsense.com/2021/03/what-if-housing-
| pri...
| SubiculumCode wrote:
| This is very interesting but I wonder if the housing crisis
| is not reflected in that chart because it's an average of
| presumably average American mortgage rates. What about
| California mortgage rates? I'd love to see that last chart
| restricted to California where the prices have skyrocketed.
| SubiculumCode wrote:
| https://www.corelogic.com/wp-
| content/uploads/sites/4/2021/06...
|
| Here is the same chart but for California regions
| rossdavidh wrote:
| Interesting, but that chart appears to end in 2016?
| mediaman wrote:
| Your other post is dead for some reason so I am reposting
| the chart you posted, showing mortgage cost per month for
| areas of California:
|
| https://www.corelogic.com/wp-
| content/uploads/sites/4/2021/06...
| robterrin wrote:
| Came here to upvote anybody who mentioned Henry George and the
| land value tax. Can't believe I'm the first one in this thread.
|
| Read Progress and Poverty, he predicted it all over 100 years
| ago, and provided the solution.
| https://oll.libertyfund.org/title/george-progress-and-povert...
| tryptophan wrote:
| He didn't provide a workable solution for how to value land.
|
| I love George as much as anyone, but valuing land independently
| from what is on it is very tricky. Yes, yes, i know there are a
| bunch of suggestions for how to do this, but none of them seem
| to work well easily in practice.
| 6gvONxR4sf7o wrote:
| I'd love to see the same charts in terms of monthly payments on a
| new mortgage, rather than sticker price. The price itself matters
| in terms of downpayment, but ultra low interest rates are a huge
| factor. Right now, interest rates are so low that a huge mortgage
| has the same payments as a small one years ago would have been.
| Especially when you take inflation into account.
| patrickthebold wrote:
| One thing I think people overlook is that there's a hidden cost
| to buying at low interest rates: if rates go up that will eat
| into your resale value, and it's less likely you can refinance
| at a lower rate in the future.
|
| If you bought at a high interest rate and then rates drop you
| really make out, and that's less likely to happen to people
| buying now.
| cudgy wrote:
| Also, artificial low rates are causing increased inflation of
| prices, which means cash buyers and buyers that would pay off
| their mortgage quicker are at a disadvantage.
| milkytron wrote:
| > artificial low rates
|
| What do you mean by artificial here?
| danuker wrote:
| Rates depressed by the central bank buying everything
| deemed "safe".
|
| Very few "natural" investors (as opposed to "artificial"
| central banks) would accept a 0.25% yearly return on
| their capital.
|
| https://tradingeconomics.com/united-states/interest-rate
| cudgy wrote:
| For example, Interest rates are so low that the
| traditional alternatives of stock investments are no
| longer present. Traditionally, a bond would include a
| rate that is beyond inflation. Nowadays, government bonds
| return rates below inflation. This is artificially low
| and creates a bubble in the stock market (and other
| assets like real estate) since the traditional option to
| put money in bonds has been artificially devalued.
| [deleted]
| forrestthewoods wrote:
| Home price isn't technically the right metric. "Mortgage payment
| to income ratio" is. As mortgage interest rates go down home
| values go up, but mortgage payments might now.
|
| No doubt housing is expensive and getting more expensive. But
| I've always wanted to see the mortgage payment plot too.
| Rebelgecko wrote:
| I wonder, is there a similar metric that tracks the average
| monthly mortgage payment over time instead? I think for most
| people's purposes that's a more relevant number and won't have
| the confounding factor of interest rates (except to the extent
| that interest rates influence home prices, so maybe this would
| end up mirroring the case shiller index?)
| lvl100 wrote:
| I wonder what would happen if we stop financial institutions from
| "investing" in residential real estate.
| bequanna wrote:
| Do you mean stop institutions from purchasing residential real
| estate or are you referring to providing mortgage loan
| liquidity?
| LukeShu wrote:
| NB: The Y axis of the first chart does not start at 0.
| disqard wrote:
| I missed seeing your comment (you beat me to it by 4 minutes)!
| tqi wrote:
| Given that the median household income trend is (relatively)
| linear over time, is this ratio telling us much more than median
| home prices alone?
| RoadieRoller wrote:
| Zillow and Open Door are manipulating the home prices in US.
| https://news.ycombinator.com/item?id=27765536 Cheap Loans,
| surplus cash, and inventory hoarding.
| marcodiego wrote:
| Are we close to another housing bubble like in 2008?
| TuringNYC wrote:
| In the US, lending standards in 2005-2008 were openly silly and
| terrible. Lending standards today are much stricter, though not
| perfect.
|
| I'd bet on a horizontal. (<-- PERSONAL PREDICTION HERE) The
| government is in a bind now -- they cannot just allow a housing
| pop because that affects the middle and upper-middle class
| voter base. Ending ZIRP would also pop the equity bubble --
| again bad for the wealthy and middle-class voter base.
|
| The best they can do is try to contain it. We've already seen
| the government too scared to reign in monetary policy in
| 2009-2021 even when things were good -- so thats a good
| indication of how scared they are to normalize things again.
|
| The best they can do is allow controlled inflation, as they are
| doing, and allowing real prices to stabalize on an inflation
| adjusted basis.
|
| Unfortunately, in all this, US fiscal and monetary policy has
| truly punished the young.
| m_ke wrote:
| We're in an everything bubble that's about to pop. Evergrande
| is about to take it all down.
| the__alchemist wrote:
| Are you shorting any stocks / indexes?
| TameAntelope wrote:
| How long will you and your Reddit pals keep saying this
| before you realize how untrue it is?
|
| Last prediction I heard was that everything was going to
| crash today. Now it's next week. Next week will it be
| November? 2022? 2024? 2030?
|
| Over and over again, I see newly minted retail investors
| discover the only hard part about investing; actually knowing
| when things will happen. If you can't say _when_ the MOASS
| (or whatever the "bad thing" is this time) will actually
| happen, it's useless to keep doomsaying about it in the
| meantime.
| m_ke wrote:
| I don't hold a single share of public stock nor crypto and
| have never posted on any investing forums.
|
| Evergrande could end up tanking the Chinese real estate
| market and a take bunch of banks down in the process unless
| the CCP steps in and nationalizes it.
| TameAntelope wrote:
| It could indeed do that highly unlikely and globally
| catastrophic thing, or it could be mitigated
| substantially by the amount of time and resources that
| "bunch of banks" have now that this has been going on for
| some weeks.
|
| Ever since Taleb wrote about "Black Swan events", it
| feels like people are falling over themselves to identify
| the next one at every opportunity, and when (through
| random chance) some group or person gets it right, it's
| going to be paraded about as some kind of indication of
| their sage wisdom.
| mensetmanusman wrote:
| Now it's good time to mention that 'The Big Short' is a good
| watch.
| nullc wrote:
| I wonder if how this can be corrected for the different timing of
| the numerator and denominator. I assume housing prices are closer
| to real time while median incomes are lagging by a year.
| a_c wrote:
| https://www.numbeo.com/property-investment/
|
| Asian cities are way more expensive than american and european
| ones. Home price with a multiple of 15x to annual income is
| surely high.
|
| > Price to Income Ratio is the basic measure for apartment
| purchase affordability (lower is better). It is generally
| calculated as the ratio of median apartment prices to median
| familial disposable income, expressed as years of income
| (although variations are used also elsewhere).
|
| Hong Kong is having a price to income ratio of 44.69
| https://www.numbeo.com/property-investment/country_result.js...
| with Price per Square Meter to Buy Apartment in City Centre of
| HK$ 253,655.52 (32k USD)
|
| Side question, is the data highly sought after that the website
| is fetching US$20 to download?
| unethical_ban wrote:
| Just throwing an idea out there: what if we abolished or heavily
| penalized long term renting?
|
| No more renting a house for years. No more apartments. If you are
| in a long term contract, you get equity.
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