[HN Gopher] Priced out of home ownership
___________________________________________________________________
Priced out of home ownership
Author : user20180120
Score : 194 points
Date : 2024-05-27 13:39 UTC (9 hours ago)
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(TXT) w3m dump (www.bbc.co.uk)
| vouaobrasil wrote:
| Where possible, states should build more tiny house communities,
| or have land where putting up a tiny house is legal and pain-
| free. There should also be a law prohibiting a person from owning
| more than one of them, except for temporary periods of moving out
| of one and into another. (The same should hold for regular
| houses, too.) Effectively, land is a different sort of commodity
| than most others: it is truly finite, and people should not be
| able to make as much money off it as an investment as they
| currently do.
| llamaimperative wrote:
| A Land Value Tax is much simpler to enforce, more generally
| applicable across all housing product types, and a lot less
| artificially constraining of local decision making.
|
| Agreed land is totally unique and should be handled very
| differently from other forms of wealth.
| vouaobrasil wrote:
| Yes, that is true. Though I would argue that we still need
| some rules on land ownership to begin with that is
| independent of the prices set by a market.
| yourusername wrote:
| >Where possible, states should build more tiny house
| communities, or have land where putting up a tiny house is
| legal and pain-free.
|
| But let's just call them what they are: Trailer parks. I just
| don't see how trailer parks are going to solve the problem. You
| may have cheap land but if you put 500 trailers on a plot
| you're still going to need sewage hookup, power and water for
| 500 homes.
| vouaobrasil wrote:
| They don't have to look like traditional trailer parks -- at
| least not the kind that I've seen. But besides that, they
| will be cheaper. That's the point.
| yourusername wrote:
| How much of the cost of housing is construction vs land
| costs, utility hookups, developer profit and permits? Tiny
| houses are relatively energy inefficient (a lot of wall
| surface for the living space), inefficient in land usage
| and very expensive per square meter. And they are not
| suited for families with children. I wonder if these trade
| offs are worth it against building a reasonably sized
| prefab home.
| vouaobrasil wrote:
| One must also ask in addition to your pertinent
| questions, can the market bear putting the same price on
| a tiny house as it can with a large house? It's about
| perceived value. It's the same as anything "wedding". The
| price will go up just because the word "wedding" is
| there: wedding photography, wedding invitations, wedding
| catering.
|
| With tiny houses, you're going to get the opposite effect
| of the price being lower because if of the "tiny" aspect.
| Aeolun wrote:
| What the US needs is some expectation adjustment. If you
| make all your houses and lots 2x smaller suddenly you can
| fit four times as many people in the same space.
| 0_____0 wrote:
| If you work this problem long enough you're going to
| converge on apartments/condos. It solves the problem you
| care about and all the caveats mentioned.
| c22 wrote:
| Urbanization facilitates specialization which is _the_
| engine that drives inequality. So, make all your houses
| and lots 2x smaller and suddenly you can have more
| density and higher levels of inequality. Yay?
| Aeolun wrote:
| This does not bear out in any location I have lived.
| c22 wrote:
| Really? It bears out everywhere I've ever lived and also
| in the archaelogical record.
|
| Don't make the mistake of equating inequality with
| poverty. Specialization is certainly a great driver of
| efficiency and wealth creation. This trade-off can be
| fine (in a rising tide floats all boats sense) but we
| have to keep our eye on the levers.
| prawn wrote:
| What would you say differentiates a tiny house from a
| trailer set up in a trailer park? And from a tiny house
| estate to a trailer park?
| Filligree wrote:
| What's the issue? Utilities benefit from density; it's much
| chapter to run pipes when they're shorter per house.
| nradov wrote:
| Sure, it's cheaper to construct utilities on a per-unit
| basis in dense areas. The problem is that in medium-density
| areas the utilities were built out decades ago and are near
| capacity now. So, in order to add more housing units and
| residents in a neighborhood they have to rip out and
| replace many of the utilities. This is extremely expensive,
| and disruptive for existing residents.
| immibis wrote:
| Then do that. That isn't nearly the majority of the cost of a
| home.
| lucidguppy wrote:
| How about developing the "missing middle" in urban development.
|
| https://en.wikipedia.org/wiki/Missing_middle_housing
|
| Efficient and healthy land use for housing was solved in the
| 1900s - we don't need tiny homes.
| schnitzelstoat wrote:
| Yeah, American houses are massive compared to what we have in
| Europe and often have large amounts of space around the house
| too.
|
| In England, row housing is quite common and that seems a good
| compromise between density and comfort.
|
| I live in an apartment block in Spain and it's quite a lot
| worse than even row housing due to noise from neighbours,
| lack of parking etc.
|
| It's okay for young people, but it'll be hard to raise a
| family in, which is probably partly why we have such low
| birth rates here.
| prawn wrote:
| And Australian houses are, as I understand it, bigger
| again. There was a thread somewhere about where to put your
| washing machine: bathroom or kitchen. And every Australian
| was in there getting completely confused because the vast
| majority of houses in Australia have a dedicated laundry
| room usually with a trough, bench top, washing machine,
| dryer, etc.
| throwaway1105q wrote:
| I have lived in an apartment my entire life. I'm in a
| building with 15 floors and 5 flats on each right now. My
| direct neighbors have a newborn baby. I don't hear a thing,
| literally - I wouldn't know there are other people if I
| wasn't 20 meters above the ground. Don't compromise on
| build quality like the Spanish do, build it like the
| Germans, Poles, Czechs and Slovaks do - and you won't have
| any issues.
| schnitzelstoat wrote:
| Yeah, that's true. I guess I don't trust developers to
| build decent buildings, especially affordable ones.
|
| In England, the new-build homes are often of a far
| inferior build quality to the older ones built after the
| war.
| FireBeyond wrote:
| Yup. You would think "builder grade" materials and work
| in a home was a sign of quality, a la "craftsman"... but
| no, it's "built using the cheapest shit that met code,
| and put together on deadlines".
| pandaman wrote:
| People living their whole life in apartments do not
| create nearly as much nuisance as people who moved into
| apartments from detached houses, where they grew up. They
| don't wear hard-soled shoes inside, they don't drop stuff
| on the floor, they don't blast music and don't even own
| 1500W subwoofers, or weight racks, or treadmills.
|
| For some reason people believe that a little baby is the
| most noise possible and it's often used in such
| discussions as an evidence of complete sound-proofing of
| their dwellings. While people do instinctively get
| agitated from a child's screams the power of these
| screams is very low. This is why parents get baby
| monitors as the screams don't propagate well even between
| floors in a single-family house. Even adults, unless
| trained, can't scream nearly as loud as a 200W Bluetooth
| speaker. Get your neighbor upstairs to drop an empty
| barbell bar and see how you won't notice it. And in the
| US your neighbor can be dropping a 300 pounds barbell
| while having a party with people dancing with
| accompaniment of 2.5kW sound system, at 2:30 am.
| amluto wrote:
| And yet there is a shortage of urban units with 3+ bedrooms
| in most US cities.
| FireBeyond wrote:
| In my city they looked at that. My city is not one of the
| most expensive in the country (upper middle?), but it has
| been generally near the top of the "biggest YoY increases in
| home values" over the last decade of so.
|
| All sorts of feasibility studies. Options.
|
| And then out came the NIMBYs. "My grandkids play in the
| street and I'm scared they won't be able to anymore",
| "there's going to be cars parked everywhere on the street and
| we won't be able to find parking" (uh, you have driveways and
| garages, no?)
|
| "What's this going to do to our property values?" This was
| the kicker. "Well the most conservative of our studies showed
| that it looks like we'd go from 11% YoY value increases to
| 8-9%."
|
| Wow. You would have thought the city was pouring water in
| everyone's gas tanks, or assaulting their grandmothers.
|
| "HELL NO. I have a right to double digit property value
| increases!" Even when the lower increases would still be in
| the top 20% of property markets in the country (and being
| clear, still an 8%+ ROI), no way in hell were any of those
| proposals going to pass.
| cush wrote:
| Row houses and flats are better. Zoning laws prohibit them in
| most neighborhoods though.
| imperfect_light wrote:
| We used to have housing of last resort, places like SROs that
| were unpleasant but cheap (and to be fair, they were often
| firetraps). But then we decided it was inhumane so we banned or
| greatly restricted them, and surprise, the people that would
| have been in an SRO now live in cars or tents, definitely not
| an improvement.
| andrewstuart wrote:
| Society in UK, USA, AUS,Canada has been destroyed by housing as a
| financial instrument instead of....... housing.
|
| And politicians love every dollar of price increase.
|
| There's the homeowners and the renters/serfs and nothing in
| between.
|
| Dead society, nothing to aim for or live for.
| phyalow wrote:
| New Zealand too. I totally agree. There is something utterly
| rotten with the seniorage abilities of commercial banks and the
| multigenerational distortions it has created by virtue of
| leveraged (mortgage) lending.
| artemonster wrote:
| tbh I am so angry about this I dont even know with whom to be
| angry with in the first place. we just "got" here and everyone
| is just waving hands, especially politicians, that promise to
| fix housing crisis since 2000 and nothing happens, it just gets
| worse. I think some heads need to fly, french revolution style
| and that needs to be this violent in order for elites to be
| afraid again, idk what else can help.
| JonChesterfield wrote:
| The leaders of violent revolutions aren't especially likely
| to govern with more skill or empathy than those they
| overthrew. The selection criteria of charismatic and violent
| isn't very well aligned with benevolent rule afterwards.
| throw__away7391 wrote:
| Be angry at the currently retiring generation. This was
| consciously and deliberately engineered for their benefit.
| They even had the wisdom to carve out property tax exemptions
| for themselves. Perhaps they did not bother to consider what
| the long term consequences would be, but that is to be
| expected. The politicians merely did their bidding.
| naveen99 wrote:
| Housing is naturally a valuable thing. From birds with nests,
| to dogs and lions marking their territory. it's something
| valuable that you self custody.
| Workaccount2 wrote:
| Politicians love every dollar?
|
| Regular people own the overwhelming majority of homes, and they
| love every dollar of increase.
|
| The finger pointing at corporations or politicians is totally
| misguided. It's the locals who collectively are invested in
| their homes and collectively (through the votes they cast)
| create the disastrous situation we are in.
|
| Even the most bleeding heart liberal is all about "protecting
| the character of our neighborhood". Just look at San Francisco.
| prawn wrote:
| I'd agree with this. In Australia, it is too financially
| attractive to own investment property and enough of the
| population makes it a political gamble (at the bare minimum)
| to change that.
| FooBarBizBazz wrote:
| > Even the most bleeding heart liberal is all about
| "protecting the character of our neighborhood". Just look at
| San Francisco.
|
| I love those green and saffron signs about welcoming refugees
| that they put in the neighborhoods where you can't touch
| property for under $2M. I want stickers I can slap on those
| signs that say "...if you can afford this neighborhood, lol."
| objektif wrote:
| This is very accurate. Thanks for speaking out.
| DataDaoDe wrote:
| For those interested, Gary Stevenson has an interesting take on
| what is causing this, even though his view is focused on the UK
| market: https://www.youtube.com/watch?v=kNUNR2NZvFM
| cedws wrote:
| Something about Gary Stevenson doesn't feel right. Although
| what he says generally sounds good, all of his videos contain
| the exact same rhetoric about blaming problems on wealthy
| people. And yes, he says he's an inequality economist so it
| makes sense that he would say this, so why not show the numbers
| and data to back up his claims? He talks for 10-20 mins
| seemingly pulling his theories out of thin air. In that very
| video you linked he claims he saw house prices rising as a
| result of COVID while all the other economists were blind to
| it... uh no? He doesn't use the kind of vocabulary I would
| expect from somebody who has deep knowledge of the subject
| either.
|
| What is he getting out of making these videos other than
| playing the populist game? Has he actually been verified to
| ever have been "Citi's top trader"?
| m4rc1e wrote:
| His recent book went #1 on the Times best seller list so I
| guess his videos have been a brilliant form of marketing.
| bdcravens wrote:
| I bought in 2022, and while it was new construction, it's a
| pretty mid-range house. No premium finishes, in a growing but
| small city northwest of Houston.
|
| If you told me 10 years ago how much I paid for it, I'd ask what
| the name of my butler is.
| caeril wrote:
| Indeed. My home "value" has roughly doubled in the last five
| years.
|
| Sounds nice, but land/home values in the area I'd like to move
| to has nearly _tripled_ in the same timespan.
|
| I feel bad for renters priced out of the market, but many of us
| who have "enjoyed" the upside are actually deeply underwater
| relative to our preferences, to say nothing of the doubling of
| insurance premiums, and ~25% property tax hikes in the last
| five years.
| aaomidi wrote:
| Property tax shouldn't be going up with this tbh. If
| everyone's housing and land is becoming more expensive, then
| you need to tax smaller %s to get the same budget.
|
| To me this sounds like your city/state is just ballooning
| their budgets.
| khuey wrote:
| You don't need the same budget. You have to pay employees
| more to keep up with the rising cost of housing and land
| (or they all quit), so the budget has to go up too.
| ryandrake wrote:
| And... Look at California's prop 13 for what happens when
| property taxes can't rise with the market. People just
| keep their homes forever because they don't want to sell
| and buy a new place where the tax rate will ratchet up
| from the sale. We have multi-million dollar homes that
| are taxed as if they were $50,000 homes, starving the
| local area's schools and infrastructure of funding.
| nradov wrote:
| The local governments and school districts are hardly
| starving. School spending per student in California is
| above the national average. Property taxes aren't the
| only source of government revenue: we also have income
| tax, sales tax, and a wide range of other fees.
|
| Proposition 13 did cause some distortions and needs
| reform. But it has at least been effective in stopping
| the former unchecked growth in local government spending
| and limiting the corrosive effect of public employee
| unions.
| rcpt wrote:
| Why don't I see very many school busses in California?
| jb1991 wrote:
| > many of us who have "enjoyed" the upside are actually
| deeply underwater relative to our preferences
|
| what do you mean by this?
| IAmGraydon wrote:
| What he said makes zero sense. Of course a more desirable
| area is going to appreciate faster. He's acting like he
| should be able to trade his less desirable property for a
| more desirable one 1:1.
| patall wrote:
| They bought a starter home for say 100k which is now
| 200k. But the family home they now want tripled in the
| same time from 200k to 600k. So even though they now have
| 100k more, they need 400k more for their desired house,
| while only 200k before (Numbers obvioulsy chosen
| randomly)
| fire_lake wrote:
| Rising prices are great for people who want to downsize and
| terrible for people who want to upsize. Many millennials
| are "better off" than their peers having bought an
| apartment but can't afford to move to a modest family home.
| The traditional housing ladder no longer applies.
| chomp wrote:
| I bought in the same exact area 10 years ago, this house was
| over 200k cheaper than it is now. There's no way I'd be able to
| afford modern prices.
| unixhero wrote:
| I bought in 2021, a massive place but a complete refurbishment
| project. I am not done. I have no more money and no more
| willpower to invest more into this. I totally regret the
| purchase.
| rr808 wrote:
| I always assumed when the baby boomers retired there would be a
| flood of big family houses coming up for sale.
|
| I see it in my parents that they're pretty comfortable staying in
| the family house as long as possible, I'm happy with this. It is
| made a lot easier by the fact that prices keep going up so
| staying in a house that is oversized financially is rewarding.
|
| I'd like to think it'll all come to and end one day as the spiral
| reverses, but I've been wrong for so long now I'm losing faith.
| omnibrain wrote:
| > I've been wrong for so long now I'm losing faith
|
| There is a saying: ,,The market can stay irrational longer than
| you can stay solvent."
| mschuster91 wrote:
| > I always assumed when the baby boomers retired there would be
| a flood of big family houses coming up for sale.
|
| Here in Munich, they indeed are... and wherever possible, they
| and their often beautiful gardens get torn down, and the entire
| plot gets "densified" by creating as much indoor space as
| possible. What was one house for one family is now _at least_
| 6-8 apartments for DINKs, often built in shoddy quality with
| corners cut everywhere but priced and sold at record amounts
| (that still get paid because all the tech and car bros
| massively distort the wage market).
|
| On one side, it's positive because the lack of housing is
| absurd.
|
| On the other side, _none_ of the surrounding infrastructure was
| built with that density in mind. Parking overflows everywhere
| because you physically (slope angle vs lot size) can 't create
| enough garage spaces, traffic itself is getting more and more
| dangerous as the small streets have been built as tiny veins
| but now have to carry 2-3x the traffic load, public transport
| can't handle it as well, doctors/kindergartens/schools are on
| the verge of collapse, the grid operator doesn't allow PV or EV
| installation because all the density increase would first
| require a complete overhaul of the last mile distribution grid.
| And on top of that, biodiversity has taken a visible hit as all
| the trees and bushes getting ripped out and replaced by steel
| eyesores and yards being replaced by gravel so that the
| hipsters don't have to bother with mowing a lawn don't support
| insect life, so the birds vanish as well. No free-roaming cats
| any more either thanks to traffic.
|
| Seriously, screw urbanization and gentrification. We absolutely
| need to revitalize rural areas again.
| pavlov wrote:
| _> "Seriously, screw urbanization and gentrification. We
| absolutely need to revitalize rural areas again."_
|
| Covid-19 was effectively a massive experiment to test whether
| people want that, and turns out they didn't.
| Rinzler89 wrote:
| People want to have their cake and eat it too. They want
| the peace and quiet of single family homes with lots of
| space of rural areas for their garden and kids, with the
| job opportunities, infrastructure and amenities of modern
| dense hip vibrant cities where the best schools, jobs and
| entertainment are within walking distance or short commutes
| by public transportation.
|
| There's obviously gonna be a shortage of such housing
| arrangements, and therefore will come at hefty prices
| everywhere.
| mschuster91 wrote:
| Of course they did want space. Turns out most people can't
| stand being locked up like chicken in too small coops too
| long. Domestic violence exploded for example - and that's
| only from those who were actually able to call police [1].
|
| On positiver notes, you had stuff like urban gardening
| increase in popularity [2], or sales of (e-)bikes towards
| people who went and biked to the rural areas.
|
| And finally, WFH made it possible for _a lot_ of people to
| give up their expensive city housing and move out into the
| suburbs... but obviously nowhere near enough to make a
| serious dent in demand, and RTO policies are creeping up
| and destroying even that bit of progress.
|
| [1]
| https://www.news.harvard.edu/gazette/story/2022/06/shadow-
| pa...
|
| [2] https://caes.ucdavis.edu/news/people-turned-gardening-
| stress...
| twixfel wrote:
| I don't really see a decrease in population density and
| the corresponding increase in cars on the road as
| "progress", otherwise you're about to tell me that
| American-style giga suburbs are the answer to our
| problems. Densification is actually the answer as it's a
| far more efficient use of resources.
| mschuster91 wrote:
| Densification only works when designing an area from
| scratch (like China), when you spend many many billions
| on retrofits or when it was built with sufficient sprawl
| to accommodate expansions in infrastructure. You can't
| just go and tear down other peoples' houses here, it's
| not the Soviet Union.
| jltsiren wrote:
| Densification works organically when you don't ban it.
| That's the way cities have always grown. You plan for the
| future, upzone areas when appropriate, let the property
| owners determine what's in their best interests, and
| collaborate with them to ensure that the necessary
| infrastructure gets built.
| mschuster91 wrote:
| > You plan for the future, upzone areas when appropriate
|
| That is a luxury Americans and Asians have, simply
| because there is/has been just so much unsettled land
| available.
|
| Here in Europe, our cities are quite literally millennia
| old, some such as Rome dating back to the earliest days
| of recorded human civilization. It is incredibly
| difficult to retrofit _anything_ there, and that 's
| before you take archaeological and landmark protection
| demands into account.
| twixfel wrote:
| It's not a luxury only they have, and Asia has lots of
| ancient cities too, sorry to disappoint you but
| urbanisation did not begin in Europe. Just down the road
| from me in the middle of the city we have a huge
| Kleingartenverein. That area could be flats, boom--city's
| denser. Your take that it's impossible to make European
| cities denser just doesn't make any sense at all.
| mschuster91 wrote:
| Yeah, and _yet another_ piece of valuable biodiversity,
| yet another green zone down the drain. "Kleingarten"
| serve a vital and valuable role in a city's ecology.
| twixfel wrote:
| Why only reply to the comment about Kleingarten, is it
| because you realise you're wrong about what you said
| about only Europe having old cities? Which is actually a
| fairly comically cringe and ignorant comment to make? I
| live in Hamburg and it's relatively young at 1200 years
| old. There are lots of far older cities than that in Asia
| which apparently somehow have the luxury of space and
| being built from scratch (lol).
|
| Cities are dense and cities are good for the environment.
| Your dream of everyone living in the middle of nowhere
| and driving everywhere in cars would be an ecological
| disaster, far worse than these shitty Kleingarten that
| should generally be got rid of anyway, since, there's
| nothing biodiverse about Kleingarten, they're just
| monocultures that are privately owned. If we careed about
| biodiversity then we would rewild them.
| twixfel wrote:
| It's not densification if it's "from scratch", that's
| just building something dense. So in short it's
| apparently impossible to make a city denser than it
| already is. But this is trivially false. Each city's
| density varies with time.
|
| I live in Hamburg, it could certainly be denser.
| rr808 wrote:
| Germany's population has only risen 5% in 50 years. It is one
| country that should be able to have affordable houses.
| mschuster91 wrote:
| The problem is rural flight. We have insane housing
| pressure in the largest cities (Munich, Berlin, Hamburg,
| Frankfurt), but a loooot of vacant housing in the rural
| areas - over 10% of units [1], in extreme cases in Eastern
| Germany 15-18% [2]. Turns out young people flee in droves
| as soon as they can, when they don't even get ADSL at their
| home, where they don't have any chance at employment, or
| where neo-Nazis have been taking over.
|
| [1] https://www.zeit.de/news/2021-03/25/leerstand-auf-dem-
| land-f...
|
| [2] https://www.demografie-
| portal.de/DE/Service/Blog/191028-Wohn...
| rr808 wrote:
| Same everywhere. 100 years ago my great grandparents all
| lived on farms, now we're all in big cities. I always
| assumed I'd go somewhere quiet after retirement but that
| isn't looking possible anymore.
| freitzkriesler2 wrote:
| There won't be because of the massive number of immigration the
| country has faced.
|
| Either intentional or unintentional, this has the effect of
| increasing demand and with interest rates high supply is
| constrained.
| 0_____0 wrote:
| Housing construction having peaked 40 years ago might have
| something to do with it.
| cush wrote:
| Unfortunately, similar to the housing crisis , there's a
| retirement home crisis and many people can't afford long term
| care without selling the home they wanted to leave to their
| children.
| FireBeyond wrote:
| And then (and I'll admit a cynicism here, from having seen
| the best of the best to the worst of the worst) retirement
| homes (ironically often owned by Boomers) chronically
| underpay their employees so many of the facilities I've seen
| in my time as a paramedic, I wouldn't send my worst enemy to.
| There is distinctly a segment of that populace who have on
| one hand, pissed off their children sufficiently that they
| don't want them living with the family in retirement, and on
| the other have studiously applied the "fuck you, got mine"
| mentality throughout their life such that their retirement or
| nursing home options are little better than "fade away just
| on the right side of the line of neglect".
| missedthecue wrote:
| How does this logic work when the next generation/incoming
| demographic is even bigger? Boomers aren't an isolated bloc of
| people followed by 20-year-olds. It's a continuous expanding
| number of X year olds every year.
|
| For specific USA numbers:
|
| There are 18.7 million 65-69 year olds.
|
| There are 21.1 million 60-64 year olds.
|
| There are 22.3 million 55-59 year olds.
|
| Etc... You can't have one demographic retire/die off and
| everything is cheap again -- because there is always another
| demographic moving right into their place all the time.
| JonChesterfield wrote:
| The UK made renting property a lot less lucrative a few years
| ago. Something about the tax position of letting mortgaged
| property. That meant landlords sold their houses - which I
| believe was broadly the point - and thus there are fewer places
| to rent and the cost of renting has increased to the new point of
| stability.
|
| I think this probably has decreased house prices to some extent,
| but people are really insanely reluctant to sell a house for less
| than they bought it for so lots will wait for years before
| accepting the change.
|
| It's probably good times to be buying an ex-rental to live in and
| getting better as mortgage rates fall.
| dustincoates wrote:
| A similar thing has happened in France, where the government
| has restricted the rental of less energy efficient
| dwellings[0]. This is generally a good thing for the
| environment, but it has already had an effect on rental prices
| as those apartments are now taken off the market.
|
| The exact impact is a little hard to work out, because, at
| least in Paris, it's also coincided with apartment owners
| wanting to hold on to empty apartments to rent them for the
| Olympics rather than to locals.
|
| 0: https://www.connexionfrance.com/practical/timetable-for-
| new-....
| Rinzler89 wrote:
| _> apartment owners wanting to hold on to empty apartments to
| rent them for the Olympics rather than to locals._
|
| Sounds like something that can be fixed with laws.
|
| Edit: would you mind explaining your downvotes with arguments
| please? thanks.
| throwaway1105q wrote:
| We're talking about France, fix the law too much and heads
| will roll, or at least cars burn.
| Rinzler89 wrote:
| Why would people violently protest against taxing empty
| real-estate that's not occupied by locals?
|
| I'm not French but IMHO, Airbnb style short term renting
| for tourst purposes should come with hefty taxes because
| housing should always prioritize the locals who live,
| work, have families and pay taxes there, not wealthy
| foreigners on vacation.
| throwaway1105q wrote:
| Because it's the locals who own it, even if they live
| elsewhere in the city. It's probably their pension
| income. Flats are usually owned personally by small scale
| owners in Europe, it's not like the huge funds and
| corporations in US. They are not poor but also not rich,
| it's work even if it's rented long term, and a lot of
| work if short term.
| Rinzler89 wrote:
| _> It's probably their pension income_
|
| Sucks for them I guess. Maybe they should have
| diversified and invested in stocks or bonds instead of
| going all-in in housing-for-rent "investment" and
| complaining it doesn't turn up to be a huge profit making
| scheme like they expected, and expect the government to
| cover their losses.
|
| Someone's housing shouldn't be someone else's for-profit
| side-hustle gamble. It's why housing is such a mess in
| the first place.
|
| You can't have housing be affordable _AND_ provide hefty
| profit returns in private pockets at the same time. Those
| will always be in contradiction at odds with each other
| in capitalism.
|
| Honestly, I expected better from the socialist French,
| that they would have solved affordable housing for the
| masses.
| throwaway1105q wrote:
| Your mistake is assuming France is socialist just because
| of its relatively generous welfare. It's actually
| neoliberal capitalism with strong preference for large
| corporations. And that's why this would lead to a protest
| or at least voting preference shift - it'd be taking one
| of the last remaining assets in the hands of the middle
| class.
| jacknews wrote:
| It's quite likely not ex-locals who own it, and in any
| case if they no longer live locally, they're not paying
| local taxes, or supporting local business.
|
| I agree, income from property should be heavily taxed,
| it's essentially private profit from the land value, and
| that value derives directly from it's location and the
| strength of the local economy, rather than any effort or
| contribution from the owner.
| throwaway1105q wrote:
| I am not French but I live a country or two over. Here
| it's mostly people who own 1-5 apartments in the city
| they live in, they definitely pay taxes there. And short
| term rentals are definitely not as simple as "profiting
| from land value".
|
| Anyways I don't have an opinion about this, just wanted
| to answer why would people protest - because it's not
| some faceless corporation but them directly you're
| taxing.
| Rinzler89 wrote:
| _> it's mostly people who own 1-5 apartments in the city
| they live in_
|
| Owning 1 apartment is completely different than owing 5
| apartments in the same city. You can live in 1 apartment
| but you can't live in 5 at the same time. You're
| profiting off the other 4 ,so you should pay tax for it.
| throwaway1105q wrote:
| Yeah, sure. As I said, I don't agree nor disagree. As far
| as I know, rental income is taxed everywhere in EU. I
| just answered why the people would revolt or vote against
| it - because they're probably still right there in that
| same city or nearby, and you're touching their personal
| assets, not some faceless corporation/fund.
| dustincoates wrote:
| I'm not sure it's something the government wants to or can
| fix.
|
| Many apartments that are being rented are those that house
| people otherwise, Paris being very well known for emptying
| out in July/August. For those that are being held back to
| rent, it can probably be hard to know what's the truth, "we
| didn't find a tenant" versus "we didn't want to find a
| tenant."
|
| Also, I think there's also a benefit to the government, as
| they want to have this empty short-term housing stock
| available for tourists coming in. A lot of money is being
| invested in the games, it's important to get the tourism
| money to make it profitable.
| rahimnathwani wrote:
| Something about the tax position of letting mortgaged property.
|
| EDIT: I had misremembered. Landlords can still get a tax
| deduction for mortgage interest, but only at the 20% rate, not
| at their marginal tax rate. For most landlords with mortgages,
| this probably halves the tax credit.
|
| In the UK, if a private landlord receives PS1000 in rent, and
| pays PS800 in mortgage interest, they pay tax on the whole
| PS1000, not just on the money they made.
|
| There are reasonable arguments on both sides:
|
| A) Why should a landlord be able to deduct mortgage interest
| from their income, for tax purposes, when owner-occupiers
| cannot?
|
| B) Why should a landlord be unable to deduct business expenses
| from revenue before calculating taxable profit, when all other
| businesses can?
| thraxil wrote:
| Wouldn't a reasonable resolution to the conflict between A
| and B be to instead allow owner-occupiers to deduct mortgage
| interest from their income for tax purposes?
| rahimnathwani wrote:
| That just shifts the perceived inequity to:
|
| C) Why can homeowners deduct mortgage interest costs,
| whilst renters cannot deduct rent costs?
| lkdfjlkdfjlg wrote:
| > Why should a landlord be unable to deduct business expenses
| from revenue before calculating taxable profit, when all
| other businesses can?
|
| I think you nailed it. This is effectively the government
| saying "renting is not a business".
|
| Think about it. The ability to "deduct expenses" is one of
| the characteristics of businesses. Individuals also can't
| deduct rent, food etc from their taxes.
| rahimnathwani wrote:
| This is effectively the government saying "renting is not a
| business".
|
| Yes, but only if you're an individual landlord. If you
| register a company and buy the property through that, the
| normal rules apply and all interest expense is deductible.
| Of course, the mortgage might be harder to get or more
| expensive, as it's no longer secured on an individual's
| assets and future income.
| pydry wrote:
| Rents have been climbing for the same steady rate they have for
| years now. Shrinking supply meets increasing demand.
|
| Nothing about that has changed recently.
|
| The recent reforms did swap out some landlords for homeowners.
| It didnt undo the war on affordable housing it just prevented
| landlords from profiting as much from it.
|
| Which is a good thing, even if some media outlets owned by
| landlords do like to pretend that euthanizing the buy to let
| landlord is bad renters.
| downrightmike wrote:
| Its not stability, it is collusion. For all the downvoters
| Price fixing by algorithm is still price fixing:
| https://www.ftc.gov/business-guidance/blog/2024/03/price-fix...
| roenxi wrote:
| I think it is a mistake to write an entire article without
| talking about supply and demand. Demographics are one of the lest
| surprising things in statistics, they can sometimes be predicted
| decades out from an effect arriving. Housing construction is
| similarly easy to observe.
|
| I'd personally bet that there is a gentle imbalance appearing
| between how much energy the average person can lay claim to vs.
| how much they need to build and service a house and this is a
| symptom of the energy squeeze. But it might not be and this
| article isn't doing much to prove or disprove what the actual
| problems are because we need more information to make useful
| observations.
| fl0ki wrote:
| I'm an expat now but I'm hearing it's even worse back in
| Australia. [Disclaimer: Some of this may be off because I'm
| hearing it second-hand, not actively investigating myself, so
| corrections are welcome]
|
| I hear people who are already in the top 1-2% in income are told
| their borrowing power is only A$1M (~U$660K) while houses at all
| worth raising a family in cost A$3-6M. Banks don't seem to want
| to lend to them because they could instead lend to yet another
| property investor that already has a portfolio full of equity and
| collateral. The houses will sell and the mortgages will close,
| the banks can afford to be picky.
|
| If you work in tech non-remotely, you're looking at the high end
| of that because you're competing with everyone else working tech,
| heavily weighted towards Sydney, and the rest of the country's
| housing supply is largely irrelevant. The cities certainly aren't
| designed for car commuting, so the supply of locations is further
| narrowed to places that are either so close they're walkable or
| have good public transport.
|
| To my US readers I cannot emphasize enough how much this limits
| people's options both ways. When you have a non-remote job it
| limits your housing options, and if you're lucky enough to lock
| in a house, now it's limited your employment options in return.
| This isn't great for housing or employment markets. I'd like to
| think remote work has helped some people, but the most career-
| focused people I know are sticking to in-person connections,
| competing with everyone else doing the same.
|
| Meanwhile cashed-up investors can buy up several houses and
| neither live in them nor rent them out. They're taking supply
| away from both the buying and renting markets, which is their
| legal right and a smart move on their part, but totally
| dysfunctional for the market as a whole. Anyone who does buy a
| house to rent it out is doing their small part to make buying
| less affordable but make renting more affordable, making it just
| that little bit less likely that the next person out there is a
| buyer of any kind.
|
| Of course there's been doomsaying about a housing bubble pop for
| decades, especially during the world-famous pandemic lockdowns.
| Nothing popped and the exponential runaway pricing continues.
| Surely it's getting untenable enough to pop somehow, if my
| successful friends can't buy houses then I don't know who's left
| in the market except the real estate investors themselves.
|
| I honestly don't see how I can un-expat now, and I'm just
| counting myself lucky to own property in the USA. If I want to
| keep this sweet deal, my options for moving are more limited than
| they've ever been, but it looks like a lot of people would gladly
| sacrifice flexibility to have anywhere near a tenable deal on
| housing.
| BigJono wrote:
| Australia is always going to be worse as long as we have this
| weird government/cultural pumping of housing as an investment.
| Every single bogan here talks like the absolute epitome of life
| accomplishment is to have a property portfolio to laud over the
| plebcunt renters. The idea of investing in production or
| business is laughable, you don't hear it mentioned at all.
|
| Our biggest software employers are banks and real estate
| companies. Everyone I've worked with in my career has worked
| for REA or a bank at some point. There's no innovation, just
| property investing.
|
| As long as every newspaper in the country keeps running stories
| about some dipshit 20 year old magically buying 6 houses with a
| paper route, it's impossible for it to ever change.
| dalyons wrote:
| I'm an Aussie who's lived in the US for 10+ years - you are
| spot on. Every time I go back all everyone can talk about is
| property investment and house prices and buying rentals. It
| was starting when I left 15 years ago but has reached fever
| pitch now. Play a little game with yourself - see if you can
| get through any group social event without the subject of
| property coming up.
|
| It's very sad. Australia used to have a somewhat egalitarian
| mindset, but this is creating such a massive generational
| wealth and class divide that gets wider and wider every year.
| No one seems to understand the damage their quest for
| parasitic income is doing to society.
| contingencies wrote:
| Aussie with expat career, back temporarily but heading to the
| US shortly here. Beware - Aussie banks don't lend money to
| people without local income due to federal "loan serviceability
| criteria". Like zero dollars available.
| atemerev wrote:
| Pff, in Switzerland, the mean age of the first-time home buyer is
| 48, and the mean age of a homeowner is 58. And those are the
| luckiest and the richest who could actually afford buying a
| house; many rent for life.
| tonfa wrote:
| Yeah, but renting in Switzerland is fairly advantageous
| compared to many countries (rent is locked, except interest
| rate adjustments).
| elevatedastalt wrote:
| I am not sure that a tiny country that's smaller than 40 US
| states is a useful model for what kinds of homeownership can
| work.
| omgJustTest wrote:
| 2008 was low of the low for home values. In my view a few things
| have happened since:
|
| 1.hyperconsolidation in lenders
|
| 2. Real estate orgs have worked together to eliminate downward
| price pressures.
|
| 3. NIMBYs and generally "home ownership associations " have
| created so many barriers to building & reaped the profits in
| their own home values.
|
| Some good news is that most populations are slowing or declining
| on the globe, and that ought to be a substantial risk to mass
| ownership, but that will take 20years to manifest.
| AlexandrB wrote:
| Now imagine all this, but 2008 was barely a blip and not a low
| for home values - that's Canada.
| jarsin wrote:
| Every time I hear someone predict the next housing crash I
| always ask them if they have looked at Canada and Australia.
| Seems to get more and more absurd but it keeps on trucking
| along.
| marcosdumay wrote:
| I keep wondering who the hell buys the housing on my city.
|
| The time for selling is on the 2 digit months, but the
| price of any small apartment is out of the reach of 95% of
| the people that live here if they save for their entire
| life. Anything that isn't small is out of reach of more
| than 99%.
| WheatMillington wrote:
| Same in New Zealand. The parallels between New Zealand and
| Canada in housing are truly tragic.
| DrNosferatu wrote:
| To efficiently live in cities, many large public works have
| historically been completed, for example:
|
| - Cities across the world built thorough sewage systems,
| preventing the need for private citizens to empty their litter
| buckets out the window - a large river in Chicago was even
| reversed!
|
| - Cities across the world built mass transit networks, enabling
| citizens to move around efficiently without relying solely on
| private vehicles.
|
| - Cities across the world should build affordable housing
| networks, as Vienna did. This way, citizens don't have to fall
| victim to the exploitation of speculators and distortions of the
| supposedly fair market.
|
| Public affordable housing is a necessary infrastructure, just
| like sewers and transit, to create livable cities for all
| residents.
| fallingsquirrel wrote:
| dupe
|
| https://news.ycombinator.com/item?id=40489250
| fragmede wrote:
| dupe https://news.ycombinator.com/item?id=40491157
|
| check the timestamps :p
| jeffbee wrote:
| None of the measures mentioned in the article -- lower interest
| rates, lower transaction fees, down payment subsidies -- will
| lower costs. Every one of them will raise prices. You can only
| fix this with supply: build homes.
| formerly_proven wrote:
| The good ol' "subsidize demand" approach to reducing prices.
| And if prices continue to climb? Well, just subsidize demand
| harder and in more diverse ways. I assure you, eventually price
| will fall. You just haven't subsidized the demand side enough
| yet.
| pdonis wrote:
| The GP didn't say "subsidize demand". They said "increase
| supply". They're different things.
| technotony wrote:
| That's not the main source of the problem, it's governments
| printing money that's causing this.
| bsenftner wrote:
| No, it's the value of the dollar in free fall and our
| purchased economists not talking about it. It's the value of
| the dollar as reflected by the rest of the planet's
| confidence in the US, which is dropping faster than Trump can
| fall asleep and fart.
| bsenftner wrote:
| Make home ownership and renting them back to single families by
| corporations illegal. Seriously. It's the corporations doing
| ALL this. The people don't have the money.
| baal80spam wrote:
| > It's the corporations doing ALL this. The people don't have
| the money.
|
| Maybe it's like that in America. In EU, where the investment
| 'culture' is different, there are hordes of people not
| knowing what to do with their money and buying homes only to
| sell them at a higher price (flippers). Case in point:
| Poland, where the housing market is quite bonkers -
| especially in big cities.
| criddell wrote:
| If you buy a second home as an investment property and plan
| to rent it out to a single family, your accountant and lawyer
| will probably recommend you form a corporation to operate
| under.
|
| Just having a flat rule against corporations owning property
| will likely reduce the number of rentals available and a
| reduced supply will lead to higher prices.
| Pet_Ant wrote:
| One of the key factors is the increased migration for China and
| India. While people did emmigrate before, it was much lower. So
| effectively they were walled off into their own pocket. Now,
| most of my co-workers are immigrants from India. It's like the
| rest of world's population is jumping by 2 billion. That is
| going to change the value of everything related to populations
| and living.
| callalex wrote:
| Got any numbers to back up this claim?
| JKCalhoun wrote:
| They're building constantly here in Omaha, Nebraska.
|
| Affordable though? Apparently not. I mean if you have a lot for
| development are you going to build a $200K home or a $600K one
| on that lot?
| thfuran wrote:
| Single family homes are profoundly inefficient in so many
| ways. They're pretty much doomed to be expensive housing.
| jeffbee wrote:
| It sounds like you have shifting baseline syndrome. Omaha
| last year built fewer houses than had built 25 years ago, but
| the city is a third larger than it was 25 years ago. So in
| fact it is building slower than it did in the past.
| moffkalast wrote:
| Doesn't work, China built entire ghost cities and they were all
| bought up by investment firms and the prices remained sky high.
|
| We need laws against corporate ownership of residential
| housing, simple as.
| micromacrofoot wrote:
| looking at China and applying that example to the US is
| absurd, these are entirely different situations
|
| for one the "ghost towns" of China are in places no one wants
| to live, the complete opposite of what the US (or anyone)
| needs to do
| jeffbee wrote:
| The other reason this is absurd is because after the
| American press lost interest in making fun of Chinese
| "ghost cities" Chinese people moved into those cities. It's
| a case of Americans making fun of another country for
| planning ahead.
| zenapollo wrote:
| There's another way to fix it. You can regulate financial
| speculators. In the US 1/4 of all US homes are owned by
| financial institutions. I doubt it's very different in Europe
| unless they are regulated. This situation ensures only the rich
| can own a home as buyers are competing against hedge funds.
| silverquiet wrote:
| Yes, the "just build houses" contingent seems unaware that
| people (and as Mitt Romney famously said, "corporations are
| people too") can own more than one house. Supply is certainly
| an issue, but inequality is as well.
| tootie wrote:
| Mitt Romney was not talking corporate personhood. He meant
| corporations are run by human beings.
| silverquiet wrote:
| I don't remember the context that well, so you may be
| correct about that, but I think I disagree with him then
| - I think corporations are _made_ of humans, but they are
| machines (perhaps primitive AIs) and are as uncaring as a
| lawnmower.
| tootie wrote:
| Every time a mob of people get together responsibility
| becomes diffuse. You may see a corporation do something
| negative that was the cumulative result of 100 human
| beings who thought they were doing what they were
| supposed to. People who saw themselves as not able to
| directly control the outcome. Same for any large group of
| people up to and including nations.
| kevinmershon wrote:
| Yep. Homes can either be for shelter or for investment, but
| not both. We are experiencing this as a global culture.
|
| I dream of a 100% tax rate on second homes, foreign
| ownership, and corporations owning single family homes and
| condos. Or even better, make it illegal. But any politician
| who pushes such a bill would immediately get removed from
| office and the law repealed.
| jeffbee wrote:
| None that is going to make a lick of difference. Because of
| longevity, birth rates, and preferences for smaller
| households, America is short 30 million homes. You can't
| tweak your way out of this.
| tootie wrote:
| Pretty sure that stat is incorrect. There were years in which
| 1/4 of available supply was bought by investors but that
| doesn't mean they ever owned 1/4 of homes. And they don't buy
| and sit on them. They renovated and rented or sold them.
| That's perfectly fine.
| danem wrote:
| > In the US 1/4 of all US homes are owned by financial
| institutions.
|
| That is not true unless you consider having a mortgage
| equivalent to renting from a bank.
|
| What is true is that in some metro-areas like Atlanta, 1/4 of
| sales (in certain price categories) are to investors.
| mlsu wrote:
| Your causation is reversed.
|
| Financial speculation happens because people believe
| (reasonably) that the price of a home will increase. Why do
| they hold this belief? Because the demand has increased while
| the supply is kept artificially constant.
|
| That's what's so frustrating about all of this -- it's a
| complete own goal. If we all collectively do nothing at all,
| developers will move in to capture the consumer surplus. It
| will be profitable to build, not buy and hold.
| holoduke wrote:
| Same here in the Netherlands. I currently rent a 130m3 house for
| 2500 euros. 500 energy. 2500 euros daycare (4 kids). I think I
| spend around 6000, 7000 euros after taxes on fixed costs. I wont
| complain. My life is good, but for most peope here impossible to
| pay those amounts. Result is that lots of my friends with
| "normal" jobs end up living in small apartments far outside the
| cities or even move to a completely different part of the
| country. Its very hard now to start a life now. Unless you make a
| shitton of money. Everything became so expensive these days. Its
| unsustainable imho.
| prox wrote:
| Why is this happening everywhere right now? On Reddit I see
| this in so many places (US, UK, Europe, not sure about Asia)
| candiddevmike wrote:
| Too few houses, too many landlords (commercial and
| "investment properties")
| moralestapia wrote:
| Nah, there's more than enough housing for everybody; quite
| obvious by the observable fact that people have a roof over
| their heads, lol.
|
| The value of currency went down significantly, i.e. actual
| inflation is massive. Salaries didn't go up as much, not
| even close, and here we are.
|
| >inb4 ...
| moffkalast wrote:
| I recall a thread from someone from South America in the
| Slovenia subreddit, where they said they wanted to move to
| Europe because it's impossible to afford a home where they
| currently live. The response was basically "yeah, welcome to
| the club pal".
|
| It's definitely a global issue, rising population mixed with
| late stage capitalism.
| formerly_proven wrote:
| Is this late stage capitalism in the room with us now?
| ceejayoz wrote:
| It _owns_ the room.
| fragmede wrote:
| Sorry but a private equity firm has just bought the room
| and they're asking all of us to leave so that they can
| turn it into a car wash.
| moffkalast wrote:
| It's always in the room with us. And outside the room as
| well.
| factorialboy wrote:
| In brief, too many USD printed since 2008 (especially the
| Covid money printer), that percolated into certain
| jobs/professions - and lead to highly inflated asset prices.
|
| These things are worth what they always were, FIAT currencies
| have lost value.
| littlecranky67 wrote:
| Situation in Europe is often reported in misleading ways.
| Everybody calls it "housing crisis" - but we do not have
| millions of homeless roaming the street. It is actually a
| "moving crisis" - people want to move to nicer places but
| can't afford it. I.e. here in Germany, we have close to 1M
| perfectly habitable empty flats/houses - but they are in
| rural areas or the countryside. Indeed there is high demand
| for urban areas and cities, at the same time rural villages
| struggle to find and retain their population because
| everybody (especially younger people) move to the city. You
| might have heard of those italian villages offering houses
| for 1EUR, just to attract families and keep those villages
| alive.
| sir0010010 wrote:
| So, there is an urban housing crisis, or housing crisis for
| people that need to live near jobs or other people then?
| littlecranky67 wrote:
| "Need to live near jobs" is a good point. People forget
| how mobile our society has become compared to our grand-
| parents generation. Nowadays you have the possibility to
| get your "dream job" and move for it wherever you want.
| Your grand-parents most likely took the first best job
| and career available in the area, not thinking about
| "self fulfilment" in their careers. In a lot of cases you
| do not need to move to have a job, but we rather want to
| be a software engineer in a Hotshot Company in a "culture
| rich city" rather than a farmer in your rural home town.
| formerly_proven wrote:
| There are many cheap vacant dwellings in fly-over states
| and backwater towns in the US as well.
| candiodari wrote:
| That's because a house 100km away from the nearest job is
| not cheap. Even rural area houses are very expensive
| compared to what jobs in those rural areas pay.
|
| This makes them even more of a trap. The rents will go up.
| And yet, even more jobs will leave those places. And then
| you haven't saved up, because the amounts were tiny
| littlecranky67 wrote:
| You mean "job that you want or like". If you make it "any
| job that pays a roof and food on the table" you will
| hardly have to travel 100km.
| candiodari wrote:
| Those jobs are a trap. If you take them you cannot save
| up to move up to something better. And then you're better
| off on social support in the city.
| arp242 wrote:
| If you can't get a job in arschfick nowhere then it doesn't
| matter there are a million houses there, because you can't
| afford them because you need a job for that. Never mind
| people have family, friends, children (with friends,
| school, etc.) and things like that.
|
| So no, it's not a matter of "nicer places".
| TriangleEdge wrote:
| Canada has had a "housing crisis" for 15 years now. The main
| campaigning ground of the opposition are issues with housing.
| the_biot wrote:
| The strange thing is that while I definitely see it happening
| in many places around the world, not all the causes are the
| same. I think @moralestapia has it right: massive inflation
| is likely a root cause.
| tdb7893 wrote:
| I was just explaining this to my mom today. Our generation has
| a lot of luxuries cheaper but also a lot higher fixed costs
| (housing, education, childcare, healthcare, etc). Even
| adjusting for inflation my college and rent were a few times
| what she paid when she was in her 20s so my experience is that
| people now who are doing well are doing really well but people
| who are struggling are really struggling.
| blondie9x wrote:
| The problem is pretty easy to fix. 50-70% of homes (Depends on
| Area) are owned by people over 58-70 (Baby Boomers). They don't
| have good senior apartment/living options. Make more senior
| housing and provide incentives for them to sell their homes.
| There are so few available affordable senior apartment options.
| It's really saddening. Most places have 5-10 year waiting lists,
| if the waiting list is open at all.
|
| Fixing senior living options will create inventory in the market
| and give seniors better choices with an active community.
| jncfhnb wrote:
| Handouts to the homeowners does not feel like the right call
| here
| cyberlurker wrote:
| Senior living centers are often atrocious and still can set
| people back over $10,000 a month. I think a program could be
| designed without being a handout.
|
| One option could be if you're going into a government run
| senior living center you need to pass that money down to
| whoever was going to inherit it/receive it through donation.
| And that has to be a taxable event to cover the cost of the
| subsidy on senior living.
|
| People would hate that option because no one likes taxes but
| the private market is not getting us where we need to be. If
| people don't like the option, no subsidy for them and they
| are free to figure out their own senior care. That money goes
| surprisingly fast.
| jncfhnb wrote:
| And if the old people don't have enough wealth to cover the
| subsidy via taxes that they would have paid anyway just
| later on their inheritances?
| FireBeyond wrote:
| > Senior living centers are often atrocious and still can
| set people back over $10,000 a month.
|
| For "fun", most states publish nursing home reports. In the
| county I work in EMS, there are probably only two that have
| only either minor or no infractions. Every single other one
| has major / patient/resident risk infractions. Often around
| minimum staffing levels. Perhaps pay your CNAs above
| minimum wage, your LPNs above $20/hr, and so...
| blondie9x wrote:
| I'm not talking about just senior living or senior care
| places. I'm talking about total independent just 55+ or 62+
| senior apartments that have affordable rents available.
| There are very few of these and waiting lists are usually
| completely closed off and take 10+ years if your name is
| called at all.
| bbarnett wrote:
| Are you sure you a replying to the correct place? No one
| talked about handouts, just about building more senior style
| housing.
|
| Seniors can pay for that, especially after selling a house.
| jncfhnb wrote:
| No they're talking about subsidizing senior living
| facilities
| micromacrofoot wrote:
| boomers with houses have no incentives to move into them
| jncfhnb wrote:
| And paying money to get them to leave their houses is a
| terrible policy
| fragmede wrote:
| unfortunately, since they own the homes, unless you want to
| take them from them by force, you'll have to give them some
| sort of incentive to give up their homes so no matter how
| much you structure it, it will amount to the same thing in
| order to get them to move.
| jncfhnb wrote:
| Build more homes
| cyberlurker wrote:
| I bet this isn't the entire solution but it seems like a really
| good part of it. I know seniors are snapping up Ranchers in the
| US, which takes away a starter home option for people just
| getting into homeownership.
| FireBeyond wrote:
| > Make more senior housing and provide incentives for them to
| sell their homes.
|
| Oftentimes those same Boomers in business own retirement/senior
| living/nursing homes. And while generalizing, the fuck you, got
| mine attitude means that nursing staff get paid a pittance, and
| oftentimes they're abusing the 911 system (multiple homes
| around here have a "policy" to call 911 for anything worse than
| requiring a bandaid - they won't let their nursing staff
| evaluate or treat patients for ... reasons ... - so we
| (paramedics) get called multiple times a day for little more
| than first aid, if that. Meanwhile, out front of the nursing
| home is a big billboard, "Round the clock nursing care!" and
| they're sending bills to the residents/families that reflect
| that, while you have CNAs and an LPN or two barely meeting
| staffing mandates, if they even are, who are unable to do
| anything).
| BenFranklin100 wrote:
| Younger people need to join the YIMBY movement in droves. Your
| economic future depends on removing the crushing restrictions on
| building new homes, especially homes in high wage cities. The
| older Boomer generation will never change its NIMBY views. Never.
| jncfhnb wrote:
| They will die though
| BenFranklin100 wrote:
| Boomers are choosing to age in place and the youngest Boomers
| are in their late 50s.
|
| Do you want to wait 20 years?
| micromacrofoot wrote:
| life expectancy in some cities is closer to 80 now, some
| millennials will be buying their first houses in their 50s
| toomuchtodo wrote:
| 1.8M/year (55+ cohort) is potentially not fast enough to
| bring about housing policy change in a timely manner from
| this alone. Non market housing is also a necessary component
| besides YIMBY. Housing locked up from market forces is
| housing that can remain affordable.
|
| Vienna is an example: https://hn.algolia.com/?dateRange=all&p
| age=0&prefix=true&que...
| jncfhnb wrote:
| I think you'll find the real problem is that younger
| homeowners face the same incentives as old ones
| toomuchtodo wrote:
| I am a younger homeowner and am aggressively YIMBY. YMMV.
| Could not care less about value appreciation, it is
| housing, not an investment.
| BenFranklin100 wrote:
| If you own a SFH, you might even make a bundle someday by
| selling your land to a developer who puts in denser multi
| family.
| toomuchtodo wrote:
| Additional wealth does not appeal to me, affordable
| housing does. That bundle has very little value if I'm a
| contributor to the problem.
| BenFranklin100 wrote:
| By selling your single family home to a developer who
| puts many homes on the same lot as your former SFH, you
| will be helping solve the problem.
| fragmede wrote:
| yeah but you have to move to realize the value. put the
| money into the stock market instead and you can sell off
| the stock to realize the gains without having to move.
| except for the hottest areas (eg you bought in san
| Francisco in 2009), the sp500 beats real estate.
| jncfhnb wrote:
| That's the kind of claim people often make at the end of
| act 1
| nunez wrote:
| housing _is_, unfortunately, considered an investment for
| many people that cannot make relatively-significant money
| otherwise. (note: i am also against the housing-as-an-
| investment school of thought.)
| maxerickson wrote:
| If you allow private ownership, it's gonna be a
| significant financial asset that people work to optimize
| (which is not very distinguishable from an investment).
|
| Personally, I like the problems you end up with in market
| system that has sufficient supply (which we don't
| particularly have).
| BenFranklin100 wrote:
| Expansion of housing vouchers at the US federal level would
| significantly address the needs of those who can't afford
| market rate housing. Vouchers are more flexible, time-
| limited, and face less political opposition than local
| subsidized housing options.
| _heimdall wrote:
| In addition to others point out the timing issue, in many
| cases you'd end up buying a home that has been lived in for
| 40 years and is likely well due for expensive updates. Sure
| its a house and that's not nothing, but it may not really
| help with the "affordable" part that's missing today.
| RobotToaster wrote:
| So developers can build more low density unaffordable housing
| that includes nearly no social housing?
| BenFranklin100 wrote:
| New market rate housing gives wealthier people something to
| buy so they stop bidding up the price of older homes. This
| immediately relieves price pressure on the older housing
| stock.
|
| Leftist dreams of a government funded social housing utopia
| in the United States and the UK are just that: dreams.
| Reforming zoning on the other hand will strongly encourage
| developers to quickly add higher density housing in job rich
| urban areas.
| tootie wrote:
| House prices are supply and demand. More units, lower price.
| Imagine 1000 homebuyers for 950 houses. Capitalism says the
| houses go to the top bidders. Communists might use social
| credit or something. Technocrats might score on IQ. But there
| is no system that could possibly result in fewer than 50
| people being homeless.
| tootie wrote:
| It's actually getting a foothold in American politics.
|
| https://www.semafor.com/article/05/23/2024/is-congress-havin...
|
| There is no solution that doesn't involve building lots more
| houses.
| Stranger43 wrote:
| In a lot of ways this is a problem creating itself.
|
| The reason Home Ownership is desirable is that the pricing of
| houses go up faster then both inflation and depreciation caused
| by wear decreases the utility value of a dwelling, and the reason
| that houses are expensive is that the state actors are invested
| enough in this cycle to make sure it never really breaks.
|
| In a real functional market there would be no real benefit to
| house ownership over long term leases. but were dealing with a
| market thats been deliberately broken by policies promoting home
| ownership for reasons that's fundamentally religious/dogmatic in
| nature.
| lumb63 wrote:
| You talk about demand for home ownership as if it is entirely
| induced via economics rather than inherently valuable. I don't
| understand why? There are reasons why home ownership is
| desirable neglecting economics entirely. Owning a home gives
| you more control over the space you live in, in terms of the
| ability to customize the space.
| Stranger43 wrote:
| That's again a false argument, made a complete lie by the
| existence of Home Ownership associations and other contract
| covenants.
|
| Rights come from your contract with whoever hold power not
| "property ownership"
|
| There is yes some cases where owning is giving you a better
| deal then leasing in terms of rights and obligations but this
| is not an universal truth and not the reason house prices
| consistently rises faster then inflation and average
| disposable incomes that have nothing to do with the utility
| value of property as an dwelling.
|
| Ie if we were to go back to an scenario where home properties
| lost value as the loans were paid off and things got old and
| worn there would be no crisis, the issue is that the way that
| currency and banking intersect makes prices keep rising.
| xboxnolifes wrote:
| > Rights come from your contract with whoever hold power
| not "property ownership"
|
| Rights of property ownership is _always_ a superset of the
| rights of renting property. It is not a false argument.
| Stranger43 wrote:
| And your property rights come from the contract you have
| with the state. It's all in the formal and informal
| contract that govern society, and you can(as most
| suburbanites have) sign away all of the "control" that
| you seem to argue property gives you to some collective
| body.
|
| In the same vain the government(and some wery much do)
| can set pretty strict rules on what restrictions a
| private landlord can put in rental agreements and that's
| before you remember that the government itself have
| historically been the largest owner of rental properties.
|
| In the old days before the idea that owning a house was a
| ticket into a higher strata in the class system a lot of
| the problems now caused by unreasonable housing prices
| was solved by the government acting as the reasonable
| landlord, essentially curtailing the amount of
| shenanigans some wannabe aristocrat could get away with
| before going bankrupt from people not putting up with the
| abuse.
|
| In a pure "realty don't matter" libertarian mindset your
| of cause right that property rights are always supreme
| but in the real world it's always a balance of power and
| negotiations especially once we deal with urban
| communities(which is the only ones where property prices
| are a problem).
| pdonis wrote:
| _> In a real functional market there would be no real benefit
| to house ownership over long term leases._
|
| More precisely, there would be no net _financial_ benefit to
| home ownership over long term leases, so people would use the
| free market as a tool to naturally sort themselves according to
| their non-financial preferences: people who valued the non-
| financial benefits of home ownership over the non-financial
| benefits of renting would own homes, those whose preferences
| were the reverse would rent. That would not mean nobody would
| own the homes they live in.
| speeder wrote:
| I live in Portugal and here the situation is outright ridiculous.
|
| 1. There are a ridiculous amount of abandoned properties, when I
| walk the streets of major cities, sometimes more than half of the
| buildings even in expensive areas are boarded-up.
|
| 2. Meanwhile I am afraid of being homeless soon, I lost my job
| recently, and the unemployment benefit I can receive is literally
| half of my rent. Thing is, there is no "worse but cheaper" place
| to move to. I already live in a "0" apartment, with the "0"
| referring to the number of rooms. The apartment is literally just
| an empty square with kitchen sink and bathroom stuff. I don't
| even have my workstation anymore because literally there is no
| physical place for it inside the apartment.
|
| People are like: "Build more homes". Yet the amount of abandoned
| properties (by the way, this also include abandoned farmland!
| Government is upset that there are tons of that, and the result
| is land with zero management, with wildfires, poachers, drug
| traffickers...) is greater than the number of families needing.
| Zealotux wrote:
| I would expect that kind of situation to lead to a lot of
| squatting, how common is that in Portugal?
| speeder wrote:
| Instead of squatting people been sharing rent. In one
| infamous case a house that was shared between 20+ people
| burned down and killed 2 and sent 14 to hospital.
| orwin wrote:
| I'm sorry to recommend you that, but i have experience with
| homelessness. You have two temporary solutions:
|
| - join a group of squatters (hopefully you already know
| someone) until you get your bearings. The less ideological ones
| often squat old industrial properties, or long-abandoned houses
| (its rough in winter, but in Portugal you should be fine). You
| might meet some Urbex guys, they're nice and always fine with
| finding squatters.
|
| - Live in a "big enough" car. You absolutely need to rest on a
| completely flat surface. I knew someone who got the back seats
| down and put a wooden plank on it. If you're less than 1.80 and
| don't move on your sleep, you have a lot of choice (the
| diagonal is nice), else it might be a bit more expensive.
|
| A very short-term solution is squatting with a close friend,
| but you shouldn't abuse it too much, it strains relationships.
| ProllyInfamous wrote:
| I recently kayaked a stretch of the Tennessee River, between
| state parks, and within an hour of paddling I passed both a
| homeless riverside "tent city" [technically "public camping"
| on TWRA/state land] and then _the most-expensive house for
| sale_ in our entire metro area (just around the same
| peninsula).
|
| These inholdings, both impoverished and not, were each having
| their respective parties (cheap beer in common) along the
| lakeside. Titties abounded - "howdy neighbor" - the no-
| betterness of being "commoners, enjoying this day upon the
| lake."
|
| Interestingly, the poverty beach camp seemed to be having
| more fun; but obviously the multi-million $$$ homeowners are
| in much easier/better situations (likely).
| crtified wrote:
| It's one of the interesting paradoxes of human life, I
| think - that the poorer have more incentive to have fun.
| orwin wrote:
| I've lived on and off a semi-rural "squatter" community by
| ideological choice for around a year [0] (that experience
| helped _a lot_ later when i was homeless by lack of
| resources, while i finished my engineering degree), i've
| probably never had as much fun as i did at the time.
| Learned juggling, guitar and basic human interactions i had
| trouble with at the time. We shared alcohol, games and
| stories with everyone who went to say hello, even cops at
| the time (it was after Cesar but before 2016)
|
| [0]https://en.wikipedia.org/wiki/ZAD_de_Notre-Dame-des-
| Landes
| oooyay wrote:
| I live on a sleepy street that's half dense housing and half
| single family homes. Density will likely take over more than
| half of the street some day because the city has been
| relegating more dense housing to the working class areas of the
| city, which is where I happen to live. [1]
|
| Of those single family homes there is one that was owner-
| occupied for a year when we moved in. Since, it's been locked
| up and has had no renters. The couple that own it own several
| properties across my city, which I came to know as I got to
| know one of the owners while they lived here. It perplexes me,
| and the rest of our neighborhood, how someone can float a
| mortgage, much less an investment mortgage, without a renter.
| My owner-occupied mortgage costs me somewhere around $2600/m, I
| can't fathom paying two with one at a higher interest rate.
| Apparently this situation is common around my city.
|
| On the other hand, and a bit non-sequitur, is two homes will
| likely become dense housing. They're foreclosures of properties
| that were inhabited by meth addicts. The whole property from
| the building to the soil will need to be removed for various
| reasons. At auction the properties were purchased for the
| average sale price of a home of that size that had no pre-
| existing issues. It won't be the kind of housing people need
| though, if I'm a betting man; my city has plenty of SROs
| (single room occupancy) but they're at the wrong price point.
| They're now called "lofts" and "studios" with a price tag to
| match. What will be lost is two 50+ year old homes, and likely
| the ability of our street to tolerate the traffic it was
| designed for as another issue is the city not investing in
| road-building and maintenance on our street.
|
| 1: https://prp.fm/biz503-portland-building-density/
| lr1970 wrote:
| > It perplexes me, and the rest of our neighborhood, how
| someone can float a mortgage, much less an investment
| mortgage, without a renter.
|
| In the USA it is happening all the time because,
| surprisingly, landlords have little skin in the the game. LLC
| is the name of the game. Each investment property is "owned"
| by its own LLC that bares 100% of risks and liabilities
| associated with the property and shields the landlord from
| the creditors. The property is financed entirely through
| commercial loans from the banks or other lenders. If the
| property does not generate enough profits for the landlord
| they quietly take all the liquid assets out of the LLC and
| stop paying their loan and property taxes. It takes long time
| (often years) for banks and local governments to start legal
| proceedings against the said LLC. During this period of time
| the property is sitting there boarded up. Finally the LLC
| files chapter 7 -- liquidation and all its assets, close to
| zero at that time, are given to the creditors.
|
| You may ask why the banks give loans to such high risk
| entities? First of all, if the property is bringing profits
| the loans are being paid of and it is the majority of the
| cases. Secondly, if the loan fails the banks do not have much
| skin in the game either. They slice and dice the loans and
| package them into "real estate investment vehicles". Then
| they sell the packages similarly to how they did it before
| the financial crisis of 2008. The terms and abbreviations are
| different now but the gist of it is still the same.
|
| EDIT: typos
| erickf1 wrote:
| Landlords have 100% risk. Look what happened to California,
| when the state said tenants did not have to pay rent. Same
| for Washington, NY, IL, etc... The vast majority of people
| with rental properties are just regular people trying to
| make a living.
| carlosjobim wrote:
| The majority are not regular people trying to make a
| living. They are old people trying and succeeding in
| getting rich by doing nothing.
| djbusby wrote:
| Where can we find stats on this? Lots of claims in this
| thread feel good but don't point to number-sources.
|
| I do know a few retirees who rent-out the home they
| raised their family in and live in a new primary. But my
| town also has some developers who build and rent.
| carlosjobim wrote:
| Look at national stats of wealth distribution by age.
| Most of that wealth is real estate.
| NewJazz wrote:
| Wait don't the assets include the property?
| Uvix wrote:
| Yes, but if they can't find renters, the property is
| worthless anyways, so why bother keeping it?
| jandrewrogers wrote:
| > It perplexes me, and the rest of our neighborhood, how
| someone can float a mortgage, much less an investment
| mortgage, without a renter.
|
| This may easier to explain than you might expect.
| Anecdotally, the people I know in a similar position own all
| those properties free and clear, there is no mortgage.
| Consequently, the carrying costs of that empty house are
| quite low and easily afforded. Also if the mortgage is very
| old. I know someone with a single-family home in Silicon
| Valley they don't live in with a mortgage of ~$1000 per
| month; you can imagine how low the property tax bill must be.
|
| While I am sure there are people with several rental
| properties mortgaged to the hilt, I don't think it is that
| common.
| woodpanel wrote:
| I think the answer to your perplexity lies somewhere buried
| here:
|
| > The couple that own it own several properties across my
| city
|
| Without knowing which city you're talking about I can assure
| you this is rather common.
|
| The moment a property becomes just one out of many (assets)
| in your portfolio your necessity to let becomes a mere
| annoyance.
|
| Many of the housing market imperfections could be at play
| here, but it certainly doesn't help that renters are
| increasingly unable to afford to become first time buyers.
| ryandrake wrote:
| >> The couple that own it own several properties across my
| city
|
| There always seems to be this common thread running through
| these discussions, but few want to address it. It's just
| build build build, moar moar moar. The problem isn't that
| there aren't enough homes. The problem is that so many
| homes are owned by so few people/entities and are often
| vacant. We shouldn't allow people (often foreign investors
| or private equity firms) to buy a home, leave it vacant,
| and sit on it as an investment as if it were a bar of gold
| or something.
| mhb wrote:
| Increasing the supply by building will make the value of
| their investment go down and encourage them to rent or
| sell to someone who will.
| mindslight wrote:
| > _how someone can float a mortgage, much less an investment
| mortgage, without a renter._
|
| They probably have an owner-occupied residential mortgage
| that the bank (/note purchaser) hasn't called them on.
| Declaring that you're residing in one unit (either falsely or
| temporarily) seems to be a pretty popular technique for
| buying rental real estate. If the mortgage was taken out
| during the past two decades of ZIRP, then the rate is still
| fixed at something very low and most of that monthly payment
| they're "floating" is effectively just going towards the
| principle as a mandatory savings account.
| phoehne wrote:
| I'm not sure if it's the case in your location, but sometimes
| foreign buyers come in and buy properties they don't expect to
| inhabit (unless something goes really bad in their country).
| Europe and the US have strong rule of law systems that prevent
| the state from just taking property. (The government charging
| you with a bogus criminal charge to justify taking their
| property in in their home country). It's also an asset that
| they can hold, even if it's not income generating, and even if
| it loses some value. (Because it's still better than most of
| the assets they have access to in their country). This is not
| always the case in every situation, but it's common. (Ed. as
| one person pointed out below, there is also a lot of money
| laundering that takes place. In that case, the property does
| not need to make any income).
| newsclues wrote:
| It's dirty money.
| phoehne wrote:
| The vast majority is likely money laundering.
| tcgv wrote:
| Portugal had a golden visa program that granted citzenship if
| you bought real state of at least 500k EUR. That drove home
| prices up signficantly in Lisbon, specailly units in that
| price range.
|
| Under new law, the Portuguese Golden Visa no longer provides
| Residency status through Real Estate investments.
|
| [1] https://www.portugalhomes.com/golden-visa-portugal
| cpursley wrote:
| The golden visas were issued in relatively small numbers, I
| doubt they affect price much vs all the short term rentals
| like Airbnb combined with explosive popularity of Portugal.
| andrewl-hn wrote:
| Blaming foreigners is the trick local politicians love to
| use, but - at least in Portugal - very few properties are
| foreign-owned. Instead, people are reluctant to rent
| properties out in general. Real estate agents struggle to
| convince owners to put their properties on the market in a
| first place. Usually a family member dies or moves abroad and
| their relatives simply keep the place unoccupied. Often to
| convince them to rent out you have to play a match-making
| game: you have to know both lenders and prospective tenants
| for years and be a guarantor of their good character. The
| more contacts the two parties have in common the better.
| Portuguese society is very socially conservative, often
| connections matter a lot more than money, and rent market is
| one area of the economy where it is very noticeable.
|
| To sidestep the whole "can we trust each other?" issue the
| owners may want to sell the property instead of dealing with
| tenants. Properties go to the market at inflated prices,
| because every house owner in the country hopes to sell to
| mythical "rich foreigners"* they hear so much on TV and
| online. Local buyers are essentially priced out of the market
| because the price-wage gap is simply too wide, one of the
| widest in the world. An average Portuguese family with two
| incomes can't afford a two-bedroom apartment even at a
| 30-year mortgage, even if we're talking about cities other
| than Lisbon or Porto.
|
| So, properties stay listed for sale for years and years,
| owners do not maintain them in hopes of making a sale "soon",
| and buildings slowly degrade. Eventually owners realize they
| need to invest a lot of money to keep the house presentable,
| the money they usually don't have, and they start to lower
| the price way down. As a result, the market is split in two
| big distinct categories: something livable at exorbitant
| prices and places that need a lot of investment to even start
| living there. Like a GP comment said you can walk on a street
| and more than half of places are clearly unoccupied, with
| many of them slowly turning into ruins. If you want to
| describe a Portuguese urban landscape in one word the word
| would be "decay".
|
| Meanwhile rent marked is under-served. All this is further
| worsened by the internal migration pressure. Lisbon, Porto
| and all towns on a narrow shore strip between the two are
| growing rapidly in past 30 years while the interior areas are
| getting deserted. Portuguese move to places where jobs are
| and developers can't meet the evergrowing demand.
|
| *I recall I saw a stat that foreigner buyers account for only
| about 0.2% of sales each year.
| phoehne wrote:
| As I said, it's not always the case. But in some cities
| there are shuttered properties, in sometimes prime
| locations, that are held by non-residents. In some places,
| like London, it's literally a money laundering who's who.
| Carrying costs discourage just holding on to property. (I
| don't know if Portugal has taxes on real property).
| Increase the carrying costs and the incentive is to rent or
| sell. That being said, you can't do much about the location
| of the mountains or the sea.
| Chris2048 wrote:
| > when I walk the streets of major cities
|
| Portugal has started offering financial incentives for
| restoring properties, but I'm surprised this is a factor in
| Major cities, which ones do you see this? Is it also an issue
| in Lisbon?
| Chris2048 wrote:
| Is this also an issue in cities like Lisbon?
| speeder wrote:
| Lisbon is where the issue is the worst of all. When I had a
| job, I had to choose the office where I would work. I
| deliberately avoided the Lisbon office because I knew there
| was no realistic chance I would find a place to live there
| with my family with Portuguese wages.
| anon291 wrote:
| I don't understand. Does Portugal not allow squatting? How can
| there be vacant land that no one wants? Surely someone would
| just go squat and make money living off of it.
| nomilk wrote:
| Given how abundant land is, does it imply that supply shortages
| are purely man-made? (e.g. policies not allowing large swaths of
| land to be built on).
|
| Otherwise it doesn't make sense that prices are high for a good
| (housing) whose primary input (land) is in great supply.
| User23 wrote:
| The primary input isn't land, it's tolerable neighbors. That is
| of course what "good school district," "location, location,
| location," and similar euphemisms actually mean.
|
| If you have a high tolerance for crime and other antisocial
| behavior there is plenty of extremely affordable housing in
| major US cities with plenty of amenities like walkability and
| public transportation.
| xboxnolifes wrote:
| Good school district doesn't just mean tolerable neighbors,
| it also means wealthy neighbors (for more collected school
| taxes).
| nradov wrote:
| Or if you venture outside of major cities there is also
| plenty of affordable housing in unfashionable suburban. Many
| of those areas also have low crime and decent public schools.
| Not much public transportation, but plenty of free parking.
| AuryGlenz wrote:
| Define affordable. My nearest town has a population of 500
| or so and my home's price has at least doubled in the last
| 10 years.
| nradov wrote:
| Absolute prices are irrelevant. Affordability is
| reflected in home ownership rates. In some states such as
| Alabama, Maine, Minnesota, Vermont, South Carolina, etc.
| the rates are above 70%. Regular people seem to be
| finding it affordable.
|
| https://www.propertyshark.com/info/us-homeownership-
| rates-by...
| lwansbrough wrote:
| That's not really how it works as far as I understand. Their
| are economic epicentres, and building near them means greater
| productivity and economic growth. The further out you get, the
| lower the ROI. The problem is, many cities in the west,
| controlled by an aging population of "haves" who bought when
| houses were the price of a sack of beans, feel that they are
| entitled to live in the same neighbourhood they purchased in.
| Incumbent homeowners are blocking new development, which
| stifles economic growth and creates a supply shortage, driving
| prices up.
|
| You got one part of it right: building more solves the housing
| crisis. But if you built outside cities, you're asking new
| homeowners (read: young people who contribute the most to
| economic growth) to live increasingly far away from where the
| economic growth happens.
| grumple wrote:
| > feel that they are entitled to live in the same
| neighbourhood they purchased in.
|
| It's not a feeling, it's how purchasing things works.
| Plasmoid wrote:
| >> feel that they are entitled to live in the same
| neighbourhood they purchased in.
|
| > It's not a feeling, it's how purchasing things works.
|
| He means that people feel they get to control the
| neighbourhood. Exercising control over property they don't
| actually own.
| phoehne wrote:
| First, not all land is the same. The US coasts, for example,
| have much better income and job availability than sparsely
| populated cities in the middle of the country. In Europe, the
| size of the city is somewhat "fixed," depending on geography,
| transportation, etc. The same is true of some US cities,
| meaning that land is just more valuable that other land. That's
| why you see houses that are almost free in some cities, but
| those towns and cities are not the place where most people want
| to live.
|
| Second is construction cost. A round number for the US is about
| 150 USD per square foot. So a 2,000 sq. foot house should be in
| the neighborhood of $300,000. (That does not include land, just
| the structure). However, in desirable cities this number is
| higher because labor costs are higher. In sparsely populated
| cities, that number is (of course) lower. This varies country
| to country, and in some space constrained cities, vertical is
| the only direction that you can build. (As one poster noted
| below, the $150/sq foot is only for single family. Multi-story
| buildings are significantly more expensive.)
|
| But probably the biggest problem are artificial barriers to
| construction. The zoning system in the US, for example,
| prevents the construction of higher density in some areas. For
| example, a neighborhood can be zoned at 1 per acre. It's
| illegal to build a duplex, apartment, or to divide the acre
| into four and build four houses, etc. The zoning is set by a
| local board elected by homeowners in that locality. Being near
| high-density housing often lowers the value of existing homes,
| including making traffic worse and stressing the school system.
| (Also, to be fair, a sudden, large influx of new people, before
| the tax base and services catch up, can stress EMS, hospitals,
| fire, police, public transportation, sewage, water, electrical
| grid, etc. as well as just schools and roads).
|
| Finally, there are builders, who would rather sell one large
| unit instead of lots of cheaper units. Building and selling a
| 1,000,000 USD home is cheaper and easier to manage than 5
| 200,000 USD homes. If you can only build one house per acre, or
| the space is constrained by geography, it doesn't make economic
| sense to build a 200,000 USD house. Even if space isn't
| constrained, the incentive is to build luxury, high end units
| as long as you can sell all your inventory.
| TriangleEdge wrote:
| In my mind I redefine the housing crisis in Canada as a business
| clustering problem. I think the percentage of attractive
| businesses that are concentrated in a few areas is too high. This
| comes in conflict with the human desire to not live in a sardine
| can. I would leave my city, but where would I work? My options to
| have a dignified life feel limited to me, especially in tech.
| Tech bros like me are pretty constrained to cities, which I
| really don't like.
| bongodongobob wrote:
| That doesn't make any sense to me. Tech bros don't make
| physical goods. You and I can do everything remotely. There's
| no reason to live in a big city other than you chose to.
| cush wrote:
| We all want more housing but zoning laws and NIMBYs prevent us
| from building proper urban housing. Yet there's nothing stopping
| someone from building a 6bd/4ba house in my neighborhood and
| renting the whole thing out for $1600/rm.
| EduardoBautista wrote:
| Why doesn't the government build and sell housing at a small
| profit? Here in Dubai, the largest housing construction companies
| are or were government owned. It's one of the ways the government
| can have zero income tax despite oil being less than 1% of its
| economy.
|
| My only thought is that it's political, and some voters don't
| want their houses to lose value.
| piva00 wrote:
| Because of neoliberal policies. Some governments around the
| world did incentivise and even footed the bill for building
| public housing before neoliberalism took hold; for example the
| Swedish Million Programme [0] built 1 million dwellings between
| 1965-1974 where the government took the risk on 66% of the
| building costs to be repaid by tenants over 30 years.
|
| This system of building houses was completely scrapped by
| neoliberals, letting the "market" take control of supply with
| the government taking a background stance of mostly zoning out
| where they'd incentivise building new dwellings.
|
| I can see in a not-so-distant future talks about this kind of
| program being reignited in politics, the neoliberal approach
| has absolutely failed us.
|
| [0] https://en.wikipedia.org/wiki/Million_Programme
| EduardoBautista wrote:
| > Some governments around the world did incentivise and even
| footed the bill for building public housing
|
| I am not referring to building public housing. I am saying
| the government should build housing as if it were a for-
| profit company. Take those profits, and re-invest into
| building even _more_ housing. Don't try to sell to those in
| need, sell to those who are speculating on real estate and
| increase supply at the same time.
| b3ing wrote:
| In the US no one trusts the government anymore and instead
| they want the private sector to do everything. But the
| private sector only cares about profit.
|
| It's also a good way to ensure companies can milk the
| government of money and then the head of those companies
| can lobby the government to keep things how they are so
| they continue to get that government money.
| EduardoBautista wrote:
| I believe the main issue with many US government projects
| is that they _don't_ care about profit. If they did,
| maybe we could have public transportation as good as that
| of Hong Kong[0]. This idea that pursuing profits as a
| public entity is not productive when it could benefit
| society as a whole does more harm than good.
|
| [0]: https://www.youtube.com/watch?v=ELy9fOX8vtc
| dopylitty wrote:
| Profit is _inherently_ waste. It is value that is taken
| out of an enterprise and doesn 't contribute to improving
| the product of the enterprise.
|
| If there is surplus value it should stay in the
| enterprise and be used to improve the enterprise by
| improving processes or improving the lives of workers.
| Failing that it should be returned to the customers
| through lower prices.
|
| One good thing about government services is they're more
| efficient because they don't have this value being
| extracted by uninvolved parties. That means they're able
| to provide better service or lower prices with the value
| that would've been sucked out by profit takers.
| nradov wrote:
| You seem to be a little confused about the nature of
| profit. If investors didn't expect to take out future
| profits then they obviously wouldn't put in the capital
| necessary to start the enterprise in the first place.
|
| A lot of the value in government services tends to be
| extracted by public employee unions. Politicians make
| excessive commitments around wages, pensions, and job
| security in order to buy union votes and maintain labor
| peace. Then the politicians move on and future taxpayers
| are left holding the bag.
| arcimpulse wrote:
| I'm afraid you're the one that's confused. Profit is
| defined economically as revenue minus expenses, and so
| the grandfather post's first sentence is correct.
|
| What grandfather is suggesting is something like an ESOP,
| co-op, or etc. There are a long history of these kinds of
| organizations, and they thrive in free-market economies--
| unfortunately, nobody really lives in one of those
| anymore.
|
| It is telling that you say public employee unions
| "extract value" by demanding the pensions/job protections
| that should by rights belong to everyone (and often did,
| in the past). Conversely, private corporations "extract
| value" from the labor marker by struggling to provide
| _any_ job security, _any_ retirement, or even anything
| resembling a living wage.
|
| Just which sector is failing to be profitable, here?
| nradov wrote:
| You're welcome to start an employee owned co-op and build
| homes or whatever. It's completely legal and no one will
| stop you. There's nothing in our economic system that
| prevents them from working, but in practice they usually
| fail due to poor internal decision making. So I don't
| understand what you're complaining about or what point
| you're trying to make.
| JumpCrisscross wrote:
| > _If there is surplus value it should stay in the
| enterprise and be used to improve the enterprise_
|
| Profit is surplus value. The opposite of waste. Forcing
| it back into the place it originated versus letting it
| transport to the most-useful thing it can do is how you
| get sclerotic feudalism. Had we adhered to this
| philosophy during the Industrial Revolution, we would
| have just kept farming.
| piva00 wrote:
| Telling voters that their tax money will be used to build
| housing to be sold to speculators will absolutely not work.
| Even if in the long-term that somehow could end up helping
| people, no one will vote for this absurdity.
|
| You're asking for people to fund the infrastructure
| speculators thrive on with their money, on top of that you
| want to depress housing prices which another large cohort
| of society will vote against, politically your proposal
| doesn't make sense.
|
| If you cared to read the Wikipedia entry I shared the
| approach the Swedish government took was to pay 2/3 of the
| new constructions and sell those houses to people who would
| pay them back in 30 years, it's not "public housing" as you
| assumed...
| thfuran wrote:
| Aside from scale, it's pretty much the same thing but
| with the assumption that whoever is going to be buying is
| a friendly neighbor and not an evil speculator.
| kylehotchkiss wrote:
| The land under UAE doesn't have dozens or even hundreds of
| years of plot splitting and ownership claims too, there is just
| an enormous advantage to how new much of the county is and a
| government incentivized to grow. It does help that citizens
| form a smaller part of the population and that it seems like
| they get advantageous jobs and housing to keep them happy. Hard
| to compare to western counties.
| nasmorn wrote:
| Also they build with what is almost slave labor.
| kylehotchkiss wrote:
| Blame the nearby countries providing no jobs, no education,
| and no future for these laborers instead. Also don't forget
| the hundreds of thousands of people from the exact same
| countries who gain respectable middle class, stable jobs in
| UAE that their home countries don't provide. I'm not here
| to defend every decision that UAE has made but they've done
| a lot of good for people who come from countries with
| unspeakably shitty governments that deserve a lot more
| condemnation.
| Tiktaalik wrote:
| Right wing activists and government have pushed the idea that
| government is hopeless, can't do anything and shouldn't try,
| and aggressively tried to make government as limited and as
| small as possible. This is often labelled "starve the beast"
| strategy.
|
| They may well have a point, that government should only do
| things that only government can do, and that by declining to be
| involved they're leaving space for private businesses to
| operate.
|
| But yea that's how we got here.
|
| At this point any attempt for a government to be more
| intentional and interventionist would result in severe push
| back from the right.
|
| Some governments are trying. In British Columbia, the
| government has changed laws to allow the arms length public
| transit agency to be able to buy and develop land around its
| transit stations.
| ChrisArchitect wrote:
| [dupe]
|
| Discussion: https://news.ycombinator.com/item?id=40489250
| fallingsquirrel wrote:
| dupe
|
| https://news.ycombinator.com/item?id=40490860
|
| ;)
| 587846 wrote:
| I never really bothered much before to check previous articles on
| the same topic by the same reporter. It's interesting that there
| was an article from this same reporter in November 2019
| discussing US tech giants investing in housing
| (https://www.bbc.com/news/business-50295130). Then, there was
| another article about housing prices in April 2022
| (https://www.bbc.com/news/business-60921223) and 2023
| (https://www.bbc.com/news/business-64178954), and another in
| October 2023 (https://www.bbc.com/news/business-67152845), and
| then one in January 2024
| (https://www.bbc.com/news/business-68035274). I just never really
| thought about looking at previous articles by the same reporter
| before.
|
| I look forward to an article when housing prices retreat rather
| than increase.
| dhx wrote:
| Some other less-cited reasons home ownership may increasingly be
| considered expensive:
|
| - Increasing density in older cities requires infrastructure
| upgrades that are much more complex and expensive to retrofit
| than it was to plan and build the first time when space was
| abundant.
|
| - Multi-story buildings are more expensive per floor space area
| than single-story buildings. As cities become denser, the added
| expense of multi-story buildings is realised.
|
| - Home standards have dramatically increased. We've forgotten how
| common it used to be for houses to leak during storms, or how hot
| or cold houses used to be without any insulation or HVAC systems.
| We've forgotten flash floods caused by inadequate stormwater
| systems. Where children used to grow up in bunk beds in tiny
| shared bedrooms, they now are expected to have their own adult-
| sized room. Where a small kitchen used to suffice, people now
| expect a huge show kitchen and butlers pantry that is double the
| size of old smaller kitchens. Or in a country such as China,
| millions of people have forgotten what living in a cave house was
| like for their grandparents.
|
| - Complexity of expected amenities and public services have
| dramatically increased, resulting in people wanting to live
| inside large cities rather than spread out across small towns.
| People want to live within an hour of travel to a MRI machine and
| healthcare specialists. Or instead of shopping at one food store
| or dining out in one of two restaurants in a small town, people
| want to be within a few minutes of 20 choices of cuisine in a
| large city.
|
| - Materials are more expensive because it has been realised that
| clear-felling old growth forest is not sustainable, nor is
| digging up the easiest to extract resources, and we're just
| starting to realise how expensive sustainable resource extraction
| actually is. As a result of increased quality of housing and
| infrastructure, materials are enormously more complex and varied.
|
| - Safety standards for construction labour are significantly
| improved, even if just by worker and public expectation. It's no
| longer acceptable for labourers to be working in dusty
| environments or working at heights without scaffolding and
| harnesses having been planned and setup first.
|
| - Increasingly affluent populations are aging and naturally
| reducing in size. In such a demographic shift, workers can prefer
| safer and easier jobs that don't risk life-long back and joint
| injuries and all the other types of health risks common to the
| construction industry.
| the_snooze wrote:
| >Increasing density in older cities requires infrastructure
| upgrades that are much more complex and expensive to retrofit
| than it was to plan and build the first time when space was
| abundant.
|
| >Multi-story buildings are more expensive per floor space area
| than single-story buildings. As cities become denser, the added
| expense of multi-story buildings is realised.
|
| A lot of that is parking. Parking minimum laws basically hollow
| out intermediate-density development. In order to meet parking
| requirements, the only legal and economically viable types of
| buildings are low-density with cheap surface parking, or high-
| density with expensive underground parking.
| xnx wrote:
| Dupe: 6 hours ago. 71 comments:
| https://news.ycombinator.com/item?id=40489250
|
| (I thought there was some dupe protection for exact urls in such
| a close time period?)
| DamnInteresting wrote:
| It appears that this link is to the domain bbc.co.uk, the other
| is to bbc.com.
| esel2k wrote:
| I am not an economist but if we would treat house ownership
| something that is beneficial for the whole society (less traffic
| from commuters, less homeless etc) and remove the
| speculations/foreign investments around housing?
|
| Why not apply the following: - every house not used for primary
| living place is highly taxed (removing all speculative ownership)
| - charge foreign investors heavily (australia will do this soon)
| - tax reduction for renting places for lower than median per
| square meter price - incentivising affordable homes
|
| Just trying to understand why this wouldn't work?
| colpabar wrote:
| This is extremely unlikely to happen because the people who own
| multiple houses have more political power than those who don't,
| and they don't want to give them up. And even if it did, there
| would be ways to pay experts to get around it, just like the
| tax system.
| khuey wrote:
| None of that addresses the fundamental problem which is that
| there's just not enough housing. Greater Dallas builds more
| housing than the entire state of California.[1] Until that
| changes California's housing costs cannot be fixed.
|
| [1] https://x.com/JosephPolitano/status/1794495929266983191
| teaearlgraycold wrote:
| Renters in CA should be ready to tell owners resistant to new
| development to go fuck themselves. Oh, you put all of your
| eggs in one basket (real estate)? Seems like a bad decision.
| hombre_fatal wrote:
| Are speculators the problem is it the fact that housing prices
| are always expected to go up due to such limited supply?
| Instead of targeting a symptom, like speculative investment,
| why not target the root problem of prices always going up so
| that people can afford housing?
| ricardobeat wrote:
| This is partially implemented in the Netherlands, most new
| houses are move-in only, a second mortgage requires 40%
| downpayment. Rules were updated recently to include an extra
| 300k homes in the rent control scheme. People I know who are
| landlords are trying to sell.
|
| And yet, supply is so constrained that house prices continue to
| rise. Either cities need to stop growing, or build a lot more
| housing.
| FooBarBizBazz wrote:
| > In recent months, the White House has tried to address concerns
| about affordability head on, offering proposals such as rules to
| limit closing costs and a $10,000 tax credit for first time
| homebuyers.
|
| "Here's a nickel, sonny."
| lwansbrough wrote:
| In my opinion, there can only be one solution to this that will
| come sooner or later. A great correction following simplified
| zoning & building legislation. Federal governments across the
| west need to take control of building and zoning. Planning can
| remain a city/state/provincial affair, but it must be done under
| standardized and simplified building and zoning legislation. We
| are wasting unfathomable economic potential on rising housing
| costs, rent seeking, and artificially limiting economic
| development in urban centres.
|
| It is probably exceptionally challenging to manage the economic
| fallout from such a correction, but I believe it has to happen. I
| would also support draconian measures which would forcibly and
| retroactively destroy accrued home value to ensure we haven't
| extracted wealth from the younger generations. I realize this is
| unprecedented and probably unconstitutional, but that's my
| emotional response to the problem. It is plain as day: Boomers
| extracted the wealth out of the country and now they're
| extracting the wealth out of their kids. It has to be stopped.
| bryanlarsen wrote:
| Federal would require constitutional change, so it'll never
| happen.
|
| But it's the right idea -- move it up the chain so that it's
| not a hyper-local issue. IOW, at the state level rather than
| city/county. This has seen some success in California:
| https://cayimby.org/legislation/
| lwansbrough wrote:
| The Canadian government is currently facing this problem.
| Provinces have constitutional authority over building and
| zoning. One way they're trying to get around it (though in my
| opinion, no party is taking this seriously and all efforts
| thus far have fallen laughably short of where they need to),
| is by incentivizing the adoption of federal policy by
| conditioning federal housing grants on the adoption of new
| federally guided policy.
|
| This is the way for the west, if we're being serious. Once
| we've taken a few breaths and accepted that we don't want to
| be authoritative, we can see that incentivizing provinces is
| the right move.
|
| In my opinion, the federal government should be designing
| simplified building and zoning guidelines and offering
| unprecedented grants (on the order of tens of billions) to
| provinces in a first come first serve manner. Have provinces
| compete on urgency to receive the most funds, tapering off
| the offer the longer provinces hold out.
| bryanlarsen wrote:
| The BC government has been relatively successful at this.
| Housing prices in Vancouver used to be ~2X those of
| Toronto; now Toronto is more expensive than Vancouver.
|
| The Ontario Housing Affordability Task Force released a
| list of 55 things to do to reduce housing prices. BC has
| implemented a far larger share of that 55 than Ontario has.
|
| > In my opinion, the federal government should be designing
| simplified building and zoning guidelines and offering
| unprecedented grants (on the order of tens of billions) to
| provinces in a first come first serve manner. Have
| provinces compete on urgency to receive the most funds,
| tapering off the offer the longer provinces hold out.
|
| That's basically what they're doing. They can't change
| zoning without changing the constitution, but they are
| giving out tens of billions of dollars conditional on
| appropriate zoning changes. BC has received lots of money
| that way, Toronto has bypassed the province to get theirs
| and Alberta has made it illegal for Calgary & Edmonton to
| access theirs.
| jandrewrogers wrote:
| The individual States have the power to do this, you don't need
| to get the Federal government involved (nor would you want to).
| It is also much simpler at the State level, since the solutions
| can be tailored to local conditions and you don't need to get
| nearly as many people living far away to agree with you to get
| anything done.
|
| Without demonstrating success at the much more achievable State
| level, there is no way it will work at the Federal level, even
| ignoring the obvious Constitutional issue.
| AuryGlenz wrote:
| I'll keep shouting this from the rooftops: while it may
| contribute in some areas, zoning laws are not the primary cause
| of home prices increasing like they have. For proof, look at
| any rural (and I mean actual rural) area and how their home
| prices have also been skyrocketing.
|
| It's supply and demand, with other things being small factors.
| We either need to vastly increase supply across the entire
| country somehow, or cut down on demand. The latter is a hell of
| a lot easier than the former. For some reason it's ok to talk
| about this in the context of Canada and how their mass
| immigration has increased home prices, but that applies to
| almost everywhere. Japan literally has homes they're trying to
| give away.
| masterj wrote:
| > zoning laws are not the primary cause of home prices > We
| ... need to vastly increase supply across the entire country
| somehow
|
| Zoning laws reduce available supply by making it illegal or
| impossible (due to e.g. parking minimums) to build densely in
| most of the bigger cities in North America
|
| > For some reason it's ok to talk about this in the context
| of Canada and how their mass immigration has increased home
| prices
|
| 1. It's not okay to scapegoat immigrants 2. Canada hasn't
| built enough housing to keep up with a growing population,
| largely due to exclusionary zoning policies. The vast
| majority of land in Vancouver is reserved for SFHs, even
| within walksheds of skytrain stations representing billions
| of dollars in Provincial investment.
| WheatMillington wrote:
| Supply and Demand is a function of zoning, because more
| supply cannot happen without the correct zoning happening.
| WheatMillington wrote:
| We had a response like this in New Zealand a few years ago,
| with the central government putting in place MDRS rules that
| forced councils to approve medium density housing pretty much
| anywhere a developer wanted to put it. For context, NZ is
| pretty heavily weighted towards single family dwellings, and
| our house prices are amoung the highest in the world.
|
| It has been extremely effective. Of course you can never
| determine the actual effect of a policy like this in such a
| noisy environment, but everyone agrees it has contributed
| towards increased supply and falling prices, especially in
| Auckland. In the city I live in townhouses were almost unheard
| of, and now they're popping up everywhere.
| RickJWagner wrote:
| The US government printed a bazillion dollars during covid,
| continues to spend wildly, and engages in practices like transfer
| of college debt from debtors to tax payers.
|
| It's a complete mystery why inflation has run amuck.
| 2four2 wrote:
| I think you mean business loans like PPP, not student loans.
| missedthecue wrote:
| Didn't PPP go to wages? Unless it was literal outright felony
| fraud. My employer received a PPP loan and it had to go to
| non-management employee pay.
| bachmeier wrote:
| > It's a complete mystery why inflation has run amuck.
|
| The CPI inflation rate is 3.4%, and it's been under 4% for a
| year.
|
| House price inflation is at almost 6%, and it's been above 4%
| for more than 10 years. The _lowest_ house price inflation rate
| during Trump 's presidency was 4.4%. Excluding the financial
| crisis, you have to go back to the mid-90s to find house price
| inflation under 3%. Pandemic-era fiscal policy and college loan
| debt cancellation is not helpful as an explanation for the
| explosion of house prices.
| DGAP wrote:
| Stop subsidizing demand at the national level. Stop restricting
| supply at the local level.
| postalrat wrote:
| Land is cheap but building a house is expensive. If you want
| more supply then you are going to need to make building more
| economical.
| mym1990 wrote:
| Land is definitely not cheap in places people actually want
| to live, and land is the thing that is appreciating over
| time, not the structure.
| tsss wrote:
| The building does appreciate sometimes, at least here in
| Germany because the increasing absurdity of bureaucracy and
| regulations make the same class of house more and more
| expensive to build. At the same time, "lower classes" of
| houses become outright illegal to erect, leaving only the
| luxury segment for new buildings. Old buildings have
| grandfather privilege and thus become more expensive than
| an equivalent new build would be, simply because you aren't
| allowed to build new.
| photonthug wrote:
| Unfortunately things like prefab buildings that could cut
| costs in half do tend to be illegal
| NewJazz wrote:
| This is not even close to true.
|
| Land can be very expensive. Especially when it has
| infrastructure built out to it already.
| onion2k wrote:
| Land is not cheap in the UK.
| secondcoming wrote:
| And unless your property is Freehold, you don't own the
| land at all.
| IneffablePigeon wrote:
| My (UK) house is worth 3x the total rebuild value my mortgage
| provider wanted me to insure it for. This implies the land
| it's built on (and the planning permission to build the
| house) is worth twice what the structure is worth.
| djbusby wrote:
| In King County WA the assessment would have two line items.
| Land: 500,000 Improvement: 300,000
|
| They tax that at $800,000
| postalrat wrote:
| I seen plenty of land around that area for $150k or less.
| No doubt some land is worth $500k plenty is not anywhere
| near that.
| whoknowsidont wrote:
| That's not the problem at all.
|
| Stop allowing people to buy multiple homes. Stop allowing
| landlords to "collaborate" on prices.
| sharma-arjun wrote:
| The causes of homelessness are a little more complex than
| that, at least in the US:
|
| https://homelessness.ucsf.edu/blog/vacancies-are-red-herring
| gundmc wrote:
| I don't think anyone said anything about solving
| homelessness. I read this in the context of outrageous home
| purchase prices. Those can be related but are certainly not
| the same thing.
| mnky9800n wrote:
| owning a house/flat or not is not a problem of
| homelessness.
| YokoZar wrote:
| How come prices go down in the markets where supply
| increases? Are landlords being extra generous there to fool
| us?
| csallen wrote:
| How is restricting supply not a problem? The fewer houses
| there are to buy, the higher prices will get, because there
| are more people competing for less.
| beej71 wrote:
| In my state, they're building new supply, the population
| has decreased, and housing prices have increased.
| shuckles wrote:
| These aren't incompatible. Household sizes are falling
| and number of homes is an input to population, so you can
| have residents moving out on net while prices increase
| due to the remaining residents being more wealthy.
| California is an entire state of ~40 million people where
| this happens: low and middle income families move out;
| high income families move in.
| davidw wrote:
| But household formation has increased, by a lot:
|
| https://oregoneconomicanalysis.com/2023/10/26/household-
| form...
| beej71 wrote:
| Which seems to imply that housing is not too expensive,
| if millennials are snatching them up...?
| csallen wrote:
| You're confusing increases in household formation with
| increases in homebuying.
|
| You can create a new household without buying a house.
| For example, if you live with your parents as a 22yo, you
| and your parents count as one household. If you then move
| out and into an apartment by yourself, you are now your
| own household. But you haven't bought a house. As
| millennials age, more of them will obviously move out
| from living with their parents, which means increasing
| household formation.
|
| In addition, you can expect homebuying to increase within
| a generation as that generation matures and earns more
| money. _Of course_ millennials will be buying more houses
| when they 're in their 30s than when they were in their
| 20s. That's to be expected. Something would be seriously
| wrong if that were not the case. But this doesn't
| automatically mean that housing is not expensive.
| whoknowsidont wrote:
| Because the U.S. doesn't actually have a supply problem,
| despite this often getting repeated.
|
| U.S. construction of homes has actually kept up with
| population growth and moves, by every conceivable metric.
|
| What IS happening though is that landlords (private and
| corporate) "warehouse" units constantly to artificially
| restrict supply and demand, and they do it in collaboration
| with each other.
|
| Every single city and state in the U.S. has a vacancy
| problem. We DO have both houses and apartments that are
| ready and able to be rented and owned.
|
| The problem is simply the price, and the prices aren't
| being driven by legitimate supply and demand.
|
| You can see this effect happen where prices increase NOT to
| match population (and often in SPITE of it), but they
| increase to match the upper bounds of regional income.
|
| You need a place to live more than landlords need a few
| months of rent. This strategy to prevent downward price
| pressure from the market allows them to justify the current
| prices while setting up a "baseline" for the next few
| years.
|
| Some free reading:
|
| * https://www.construction-physics.com/p/is-there-a-
| housing-sh...
|
| * https://reventureconsulting.com/the-myth-of-the-us-
| housing-s...
|
| * https://charleshughsmith.blogspot.com/2023/08/the-
| problem-is...
| verdverm wrote:
| What if the people building the houses are incentivized
| to build large, expensive homes? That means the buyer
| does not have choices in their preferred price range and
| must buy above what they actually want
| AlexandrB wrote:
| You see this a lot with new condos, where the only kind
| of condos being built are "luxury condos" with fancy
| amenities and features. There's some theorizing that
| these will _eventually_ become downmarket units as they
| age, but I 'm somewhat skeptical.
|
| I once lived in a condo built in the 70s and the
| materials used were very pedestrian - linoleum counters
| and flooring in the kitchen, carpet everywhere else.
| Ceilings were 8'. No balcony. I don't see today's granite
| and hardwood condos with 10' ceilings ever becoming
| downmarket.
| whoknowsidont wrote:
| >That means the buyer does not have choices in their
| preferred price range and must buy above what they
| actually want
|
| But we don't see this happening though. Even in this
| scenario, there would still be downward price pressure.
| The market should (or would, rather) reach some
| equilibrium here.
|
| Instead what we see is UPWARD price pressure and vacancy
| despite legitimate market forces and environment.
|
| I've kind of already laid it out in the previous post but
| the next question anyone should have is "why is that
| happening?"
|
| And it's not because the units don't exist or need to be
| built.
| Glyptodon wrote:
| Taxing land vacancy or lack of density seems like an easy
| enough solution.
| csallen wrote:
| I copy-pasted this comment to my friend, who's the chief
| economist at a major real estate company you've heard of.
| Here's their response, verbatim:
|
| _> "Bullshit. It's not population that matters it's
| household formation. Millennials are the biggest
| generation and they are at the age now where they are
| forming their own households and there isn't any housing
| for them near jobs. Vacancies are all in dying rust belt
| towns no one wants to live in. California absolutely does
| not have a vacancy problem. That's just a lie."_
|
| This aligns with my (admittedly less-informed) knowledge
| as well.
|
| Your assertion that "every city" has a vacancy problem is
| particularly mystifying to me. I live in Seattle, and
| there does not seem to be a residential vacancy problem
| of any kind. Some quick Googling shows "a homeowner
| vacancy rate of 1.0% and a rental vacancy rate of 2.5%."
| That does not sound like a vacancy problem to me. Quite
| the opposite. Very, very, very few homes are available
| for sale, even as the city's population explodes.
|
| I also did a quick and unbiased Google search of
| "population growth vs housing supply." Here's what came
| up immediately: "In 2023, the U.S. saw 1.67 million
| household formations, resulting in 17.2 million household
| formations between 2012 and 2023. In this time period,
| 14.7 million housing units were started, and 13.4 million
| were completed." So again, household formation is
| outpacing housing supply, which results in more
| competition and thus higher prices.
|
| Both your comment and the links you included (which I
| perused) seem less like they're concerned with fixing
| housing affordability, and more like they have an axe to
| grind against landlords and the wealthy in general.
| whoknowsidont wrote:
| >Bullshit
|
| Let's see the data then. Other than some "trust me bro"
| comment. Not sure why you expect me to engage with vague
| assertions of authority, especially when "he" started out
| emotionally unstable.
|
| EDIT:
|
| You heavily edited your comment. The stats you are
| referencing do not say what you think they say, they are
| not a force for increasing prices. There are already
| houses that were previously built, they do exist.
|
| Not sure why you would pretend otherwise?
|
| Look at vacancy vs availability rates.
|
| Additionally, you seem to want to ascribe motivations
| instead of addressing the fact that collusion is most
| assuredly happening in every major city in America:
| https://www.vice.com/en/article/ak3vek/landlord-software-
| is-...
|
| Stick with the facts, not emotional fallacies.
| csallen wrote:
| _> Let 's see the data then._
|
| You made the vague assertion that "[e]very single city
| and state in the U.S. has a vacancy problem." You
| provided zero data to support that statement, or anything
| remotely close to that statement. I quoted data in my
| comment that directly refutes that, by showing very low
| vacancy rates in Seattle.
|
| So you are the one who needs to provide data, otherwise
| you're spreading misinformation and not helping the
| problem.
| whoknowsidont wrote:
| I see you are choosing to be dishonest. You heavily
| edited your comment. It grew in size by ~85%.
|
| And again, you quoted data but it is not asserting what
| you think it is. Look at what the data is telling you. It
| is a delta over a specific time period. It is not making
| the assertion you think it is.
|
| >So you are the one who needs to provide data.
|
| I provided 3 different links that go over this in pretty
| good detail.
|
| Respectfully you've demonstrated you are not going to
| approach this in a constructive manner or in good-faith,
| so I won't be engaging with you past this comment.
| csallen wrote:
| What's one piece of data from your links that supports
| your assertion that "[e]very single city and state in the
| U.S. has a vacancy problem"?
|
| There isn't any.
|
| I'm not sure what your motives are. But your claim about
| vacancy problems is false misinformation, and your lack
| of desire to correct that misinformation makes me
| question your motives.
| bigyikes wrote:
| What do you suppose happens to all of the people renting from
| landlords with multiple properties?
| s_dev wrote:
| It's a bit like when a big chain goes bankrupt - the
| profitable restaurants don't close another buyer comes in
| and takes over. Like Red Lobster and the staff in the
| profitable restaurants stay the same the renters stay in
| the same apartments or houses paying the same rent.
| screye wrote:
| Both are band aids for the real problem. Housing can't both
| be an investment and a basic need. You need to pick one or
| find an opinionated middle ground.
|
| If housing is an investment, then remove all protections and
| open up the supply. No height regulations, no minum parking
| regulations, no mandatory HOAs. No moratoriams or legal
| protections when loans default.
|
| If housing is a need, then regulate it like a limited
| resource. Ration it on the lower end. Ban hoarding
| (vacancies, empty plots). Limited access to repeat consumers.
|
| When the powerful talk about "finding balance", they usually
| mean having their cake (earn like an investment) and eat it
| too (protected like a need).
|
| IMO, Georgism strikes the best opinionated middleground of
| housing as an investment vs housing as a need. Grounding
| taxation in land's economic value regulates hoarding.
| Grounding the value of land in its economic outcomes makes it
| a transparent investment, rather than the cartelized asset
| that it is today.
|
| I'm personally opposed to too-much-regulation. It always ends
| up being a tool for the powerful. Rent control, Prop 13,
| affordable housing, stacks-of-paperwork and similar
| regulations always do more harm than good.
| shuckles wrote:
| > Housing can't both be an investment and a basic need.
|
| Yes it can, and it was for large chunks of the 20th
| century. Imputed rent can have high yields and therefore
| imply good "investment" income for households with long
| term stable housing demand.
| _DeadFred_ wrote:
| And for large chunks of the 20th century family farming
| fed the nation. Not sure what the 20th century has to do
| with the issue at hand.
| shuckles wrote:
| My theoretical point that high rental yields can imply
| houses are a good asset to own without price spirals
| stands regardless of time period.
|
| The 20th century is relevant because it had long periods
| of time where homes could be bought at high rental yields
| because there was lots of new construction in the USA.
| camgunz wrote:
| I think the general premise is housing can't both be so
| cheap that people with nearly no net worth can get it,
| but so valuable that it can serve as a substitute for
| retirement savings. This is from first principles true,
| but it's really only a problem in urban areas: my pet
| theory is that spiking demand for urban housing is
| driving 100% of this. Americans used to move far more
| than they do now [move], even when you factor in the
| pandemic, and they used to be more comfortable living in
| all kinds of different places, but now people move to
| cities and stay put. This is for all kinds of reasons,
| all under the category "it sucks not to live in a city
| for almost everyone". Economic opportunity is way, way
| lower [econ]. Racism, misogyny, homo/transphobia, hyper
| religiosity, and lack of diversity are huge problems.
| Urban schools dramatically outperform rural schools
| [schools]. Health care is harder to get [health care]. I
| think the data bear me out here; in particular general
| homeownership rates are basically what they were in 1963
| [homeownership], but urban homeownership rates are way
| below the average [urban homeownership].
|
| There are some signs that this trend is reversing, but I
| think that was entirely a pandemic phenomenon. Big
| numbers of Americans regret their pandemic moves
| [regrets], so I think the environment hasn't actually
| changed.
|
| It's hard to see where this goes. Most other places solve
| this by becoming very very dense (Hong Kong) or building
| great mass transit (Tokyo). It really seems like the US
| won't do either of those things--maaaaaaybe NYC will but
| that would be all. I tentatively predict that we have to
| wait for most of the Boomers to die and leave their
| wealth/houses to Millennials before we know if this is a
| bona-fide societal crisis or not: if enough Millennials
| get what they want this way it'll take the oomph out of
| any kind of policy change (probably reverse the momentum
| actually--if anyone thinks Millennials will be any better
| than Boomers they're super mistaken).
|
| But, neither outcome is really good. On the one hand you
| have the daunting prospect of a dramatic economic
| reorganization of the most powerful nation on Earth. On
| the other you have the calcification of the most powerful
| nation on Earth into something fundamentally unequal,
| illiberal and corrupt.
|
| [move]:
| https://www.census.gov/library/visualizations/time-
| series/de...
|
| [econ]: https://www.pbs.org/newshour/nation/six-charts-
| illustrate-di...
|
| [schools]: https://insight.kellogg.northwestern.edu/artic
| le/education-g...
|
| [health care]: https://www.gao.gov/blog/why-health-care-
| harder-access-rural...
|
| [homeownership]:
| https://fred.stlouisfed.org/series/RHORUSQ156N
|
| [urban homeownership]:
| https://www.census.gov/newsroom/blogs/random-
| samplings/2016/...
|
| [regrets]:
|
| https://homebay.com/moving-trends/
|
| https://homebay.com/moving-trends-2024/
| itake wrote:
| e: if you don't agree with my idea, please comment why
| instead of down voting.
|
| --
|
| > Housing can't both be an investment and a basic need.
|
| Housing as investment is a beautiful solution to how many
| people fail to properly save for retirement. For many
| people entering retirement, their home is a huge part of
| the investment portfolio, because they always made sure to
| make that payment.
|
| If properties didn't appreciate, old people would not have
| the assets to retire on, then what?
| rcpt wrote:
| > if properties didn't appreciate, old people would not
| have the assets to retire on, then what?
|
| The younger generations will find that out.
| itake wrote:
| Not exactly sure what you're implying, but I'm assuming
| you're saying that Grandma moves in with you and now you
| can't afford to have kids and take care of grandma (which
| is the current situation of several of my friends).
| rcpt wrote:
| No I'm saying that when the younger generations (who
| don't own property) get old we'll see what happens.
| itake wrote:
| ah, my hypothesis there is the younger generations will
| think they are getting their parent's house, but for many
| families, mom & dad will sell their house to pay for long
| term care facilities when they can't take care of
| themselves or walk up the stairs, leaving the kids with
| nothing.
| fire_lake wrote:
| Inequality is another issue. Even with enough homes, if they
| are all owned by minority of the population who extract rents
| from the rest the situation remains pretty dire.
| robertlagrant wrote:
| That's not an issue if there's supply. What you're describing
| (unsubstantiated) is a lack of supply being exploited.
| EgregiousCube wrote:
| Is inequality bad in and of itself? If there's a healthy
| market of buyers and sellers, but also a lot of inequality,
| is that a problem?
| bequanna wrote:
| Stop subsidizing non-owner occupied demand.
| fullshark wrote:
| This won't end until the boomers cash out their home equity. It's
| political suicide to do anything threatening that.
| fairity wrote:
| I don't get articles like this. It's arguably a better financial
| decision to NOT buy a home, and park your downpayment in a broad
| based index fund. I get that there are arguments for or against,
| but there doesn't seem to be a clear financial advantage to home
| ownership. So, what's the big fuss about? Just pay rent and carry
| on? Surely, there are better things to focus on?
| MisterBastahrd wrote:
| Every person should be able to have a right to say "This is me.
| This is where I live. I belong here." It's all fun and games
| until you've lived in one place for 15 years and your landlord
| decides to sell the place out from under your feet because a
| developer wants to build a high rise.
| IAmGraydon wrote:
| >Every person should be able to have a right to say "This is
| me. This is where I live. I belong here."
|
| Why do you think every person should have an "right" to own
| property? It's a nice utopian idea, but that's not how a
| capitalist economy works.
| MisterBastahrd wrote:
| Why do you think we need capitalist economies? It's almost
| as if you've just decided that the other thing must
| necessarily exist.
| jandrewrogers wrote:
| Same thing happens to homeowners with eminent domain. No one
| has unlimited entitlement to where they live.
| jb1991 wrote:
| It's not as simple as that. Home ownership can be a lucrative
| investment long-term, it depends on many factors. When property
| values appreciate a lot, as they have been recently, home
| owners have done very well.
| IAmGraydon wrote:
| The recent rate of appreciation is not typical. Homes
| generally appreciate at 3-4% per year. Subtract from that
| taxes, insurance and upkeep. They're a terrible investment
| unless you own rental property, at which point your tenants
| are paying down the loan.
| Carrok wrote:
| So, the alternative to buying, which is a terrible
| investment according to you, is renting, where you pay down
| the loan of the landlord. That's better, how?
| IAmGraydon wrote:
| I didn't say you shouldn't buy if you need a place to
| live. I said they're a terrible investment. Also keep in
| mind that while you may be paying down the landlord's
| loan when renting, you are also paying a massive amount
| of interest when buying. At today's rates, you'll give
| the bank $565,000 in pure interest over 30 years to
| borrow $400,000, making your total outlay $965,000.
| Either way, a large amount of money is going up in smoke.
| listenallyall wrote:
| This opinion doesn't take into account the optionality of
| the mortgage and the opportunities provided to the
| borrower. American mortgages generally allow prepayments
| - if the value of your house increases rapidly, you can
| sell, pay off the mortgage, and pocket the profit. You
| can pay additional principal at any time to reduce
| interest payments. If rates fall, you can refinance. If
| the economy is great, you're borrowing at 7 percent while
| your investments are earning 10+.
| dgfitz wrote:
| It's not. This trope is repeated on this forum all the
| time.
|
| Some people prefer the freedom of not being stuck in one
| place. Super duper. That's excellent, they prefer
| renting.
|
| Trying to convince the rest of the world that it is a
| sound financial decision in lieu of buying a home and
| establishing equity is where the argument over "renting
| is better than buying from a financial perspective" falls
| apart and the absurdities start getting thrown about.
| nradov wrote:
| Home ownership isn't a good financial option for everyone, but
| for most consumers who aren't accredited investors it's the
| only way to make highly leveraged trades. You can't buy an
| index fund with 20:1 leverage. Of course this occasionally
| blows up, but even then the downside is limited.
|
| Even if ownership doesn't make sense from a financial
| standpoint it's still somewhat essential for parents of school
| age children. Renters can be forced to move on short notice if
| the landlord declines to renew the lease, like if they're
| planning to sell or redevelop the property. This instability
| has a cost that goes beyond financial concerns.
| spacemark wrote:
| People always talk about how buying a home is the only way
| for the common person to obtain leverage. Please excuse my
| ignorance, but how does the common person use that leverage,
| exactly?
| baobabKoodaa wrote:
| Example:
|
| House costs $100k
|
| You buy house with $20k savings and $80k debt
|
| In this example that $80k of debt is called "leverage".
|
| Is this what you mean with your question or did you mean to
| ask something else?
| NoLinkToMe wrote:
| Leverage in finance is the concept of buying an asset with
| money that's not yours (i.e. a loan).
|
| So suppose you have $100, and you believe a stock will
| increase by 10% in value, then borrowing $900 and buying
| $1000 of the stock, will leave you with $1100 if your
| prediction is true. When you pay off the loan, you'll be
| left with $200, and you will have doubled your money.
|
| The loan thereby acts as a leverage multiplying the 10%
| return on investment to in this case a 100% return on
| investment.
|
| Now imagine that instead of having $100, you have $50k, and
| instead of borrowing $900, you borrow $450k, and instead of
| buying stock, you buy a home with the 50k deposit and 450k
| mortgage. The same applies, the home appreciates 10% to
| 550k, but your equity increases from $50k to $100k. Again,
| the mortgage loan acts as a lever.
|
| The difference is that most consumers do not have large and
| cheap capital available to them, say to borrow $450k to
| invest in the stock market. But most people do have such
| opportunities to invest in the real estate market with a
| mortgage.
|
| Anyway, wether it's a good investment really depends on
| many factors. The NYT buy or rent calculator is still one
| of the best sources to get an intuition on what is best for
| your circumstance.
| https://www.nytimes.com/interactive/2024/upshot/buy-rent-
| cal...
| deergomoo wrote:
| No-one can kick you out of your own home because they want to
| rent to someone they can charge more. No-one can tell you you
| can't change the wallpaper in your own home, or remodel the
| bathroom, or get a dog.
|
| Not everything is a purely financial decision. A home is
| primarily a place to live, not an investment opportunity.
| JumpCrisscross wrote:
| > _No-one can kick you out of your own home because they want
| to rent to someone they can charge more_
|
| Property tax isn't voluntary and as exogenous as a landlord.
| (Also eminent domain, to say nothing of most peoples'
| mortgages.)
|
| > _Not everything is a purely financial decision_
|
| Making the largest leveraged purchase of your life for an
| emotional comfort object is irrational. That doesn't make it
| wrong. But it ceases to be a policy concern. (I might feel
| secure having a Faberge egg in my possession, that doesn't
| mean the public needs to give a shit about it.)
|
| The reason home ownership is a public priority is various and
| I agree with it as a goal. But it's a bad financial decision
| for many people, and there is legitimacy to questioning if we
| can duplicate the forced-saving and civic engagement benefits
| more simply.
| intended wrote:
| You are mixing up a few things somewhere.
|
| Wants are infinite.
|
| Home ownership is effectively enshrined as a value in most
| economies. The emotion is part of society's design.
| Conforming to this incentive or belief is not unusually
| irrational,
| JumpCrisscross wrote:
| > _Conforming to this incentive or belief is not
| unusually irrational_
|
| Agree. But if that feeling of security is all it's about,
| it's still irrational. Even if it's conditioned and thus
| common.
|
| If you're buying a home to feel good about yourself,
| you're making a financially ruinous decision.
| dahart wrote:
| You pay property tax either way, it just might be rolled
| into your rent. You probably have years to pay missing
| property taxes, while landlords will wait nowhere near that
| long. Eminent domain is only exercised rarely, and doesn't
| even compare to how often rents are increased, or how often
| people are evicted.
| JumpCrisscross wrote:
| > _You probably have years to pay missing property taxes_
|
| Anywhere that gives a delinquent property owner years
| also tends to have strong tenant protections.
| dahart wrote:
| That's misleading and mostly irrelevant. My sampling of
| states so far yields an answer in years, looks like
| around 2-5 years depending on state. Rental evictions are
| measured in months, typically perhaps 1-3.
| JumpCrisscross wrote:
| > _misleading and mostly irrelevant_
|
| This entire discussion is as it's ignoring mortgages,
| where the entire security argument for homeownership
| breaks down beyond being an emotional comfort object.
|
| Homeownership is statistically more secure because home
| owners are richer. The home doesn't make a homeowner more
| secure, their wealth does. Remove the wealth effect and
| homeowners are about as precariously perched as renters.
| In the past decades, home-price appreciation contributed
| significantly to that wealth. Someone making the smae
| purchase today is less likely to similarly benefit.
| Particularly if they're conceding they're making a bad
| financial decision for emotional reasons.
| dahart wrote:
| > Remove the wealth effect and homeowners are about as
| precariously perched as renters.
|
| How so? I just showed that's not true for evictions due
| to non-payment, at least for the property taxes issue you
| raised. When it comes to mortgages vs rent, maybe they're
| similar risk, but in that case, the mortgage is not
| riskier, so the benefits of a house seem worth it,
| especially considering that as long as you keep up the
| payments, you are highly likely to eventually get your
| money back with a house, and 100% guaranteed to lose all
| your rent.
|
| > In the past decades, home-price appreciation
| contributed significantly to that wealth.
|
| Right, home ownership has historically been a vehicle for
| wealth building.
|
| > Someone making the smae purchase today is less likely
| to similarly benefit.
|
| Why's that? Are you assuming that real estate inflation
| might slow down, but the market won't?
|
| A house is a leveraged loan until you pay it off. If the
| price goes up, you get the leveraged return. People who
| paid $200k down payment on a $1M house in 2019 can sell
| today for $1.5M and walk away with more than double their
| money, or around 4x the profit that someone who invested
| the $200k in the stock market and got the same
| (incredibly good) returns.
|
| I don't agree that buying a house is a bad financial
| decision, how do you justify that claim? There is
| certainly a distribution of outcomes, but on average I
| think most people profit from buying a house...
| _especially_ when you compare it to paying rent.
| JumpCrisscross wrote:
| > _Why's that?_
|
| We're at record price to income levels amidst a stable
| versus growing population. (Note: I own a home.)
|
| > _house is a leveraged loan until you pay it off. If the
| price goes up, you get the leveraged return_
|
| Crazy how 2006 this pitch is. (Together with the "you are
| highly likely to eventually get your money back with a
| house." Maybe we need a housing recession, both so people
| can buy in and others reminded there is no free lunch.)
| dahart wrote:
| > Maybe we need a housing recession, both so people can
| buy in and other reminded there is no free lunch.
|
| Jesus, that's a bit dark. Getting your money back from
| the sale of something you buy isn't a free lunch. It's
| just 100% better than dropping most of your money into a
| hole called rent, and never owning anything, and being
| beholden to landlords.
|
| If my argument is too old and hasn't adapted to the 2024
| economy, which is entirely possible, then _show_ me what
| it takes to do better than buying $420k a house on a $75
| income with $84k in savings. (I'm just picking the
| "median" numbers from the article.) A 2-bedroom apartment
| where I live is anywhere from $2500 to $4k, so let's say
| $36k /year in rent. Rent is much higher than this in SF
| or NYC of course. How long do you have to rent for the
| interest on $84k in ETFs to cover $36k/year in rent,
| _assuming_ your rent doesn't go up?
| rcpt wrote:
| > You pay property tax either way, it just might be
| rolled into your rent.
|
| No you don't. Property taxes are not incident on renters.
|
| Extreme example in California
|
| https://prop13.wtf/2023/05/06/prop13-is-not-passed-on-to-
| ren...
| dahart wrote:
| Right. Property taxes are paid by landlords, who then
| charge it back to you in rent. Your example article
| indirectly says the same thing: tax cuts were not passed
| on, landlords kept them.
| rcpt wrote:
| Rent is set by supply and demand. If you give landlords a
| tax break they don't cut the rent.
|
| Not all taxes are passed on to consumers
|
| https://en.m.wikipedia.org/wiki/Tax_incidence
|
| Edit: ok it looks like you're editing your comment to
| change what you had earlier. So I'll just leave you with
| a ton of reading on this exact topic
| https://gameofrent.com/content/can-lvt-be-passed-on-to-
| tenan...
| dahart wrote:
| Landlords not cutting the rent supports my claim that
| renters are effectively paying the property tax. You can
| argue that not all taxes are passed on, but the reality
| is that landlords have a set of costs, one of which is
| taxes, and they have a set of incomes from renters, and
| the income rent will _always_ be higher than the costs,
| unless we're talking about rent control or something like
| that. If the costs exceed the rents, then landlord goes
| out of business.
|
| I edited before you replied, and just clarified. I didn't
| change my point at all.
| deergomoo wrote:
| > Property tax isn't voluntary and as exogenous as a
| landlord
|
| I live in the UK. I have to pay the same rate of council
| tax for the property whether I own it or rent it.
|
| However that's completely beside the point: my council tax
| isn't suddenly going to double overnight because a single
| person decided they can extract more money.
|
| > Making the largest leveraged purchase of your life for an
| emotional comfort object is irrational
|
| You are completely missing the point. A place to live that
| is truly your own is not like buying some luxury good.
|
| I could buy your argument were it about buying a mansion vs
| a small family home, but the article is about people being
| unable to buy _any_ home.
| baobabKoodaa wrote:
| > No-one can tell you you can't change the wallpaper in your
| own home, or remodel the bathroom, or get a dog.
|
| Yes, the housing association absolutely can tell you not to
| remodel your bathroom. Unless you literally own a house
| rather than an appartment, you really don't have a lot more
| rights than a renter would have.
|
| I am speaking as a Finnish homeowner.
| deergomoo wrote:
| Two points:
|
| Firstly I am legitimately surprised that Finland has HOAs.
| I had always assumed they were a largely American construct
| (I'm British).
|
| Secondly I was absolutely talking about owning a house
| rather than an apartment. I feel an apartment is a slightly
| different situation by virtue of being an inherently shared
| space.
|
| That said, I still it baffling that someone would try to
| exert control over what you do with the _inside_ of your
| own home.
| baobabKoodaa wrote:
| > Firstly I am legitimately surprised that Finland has
| HOAs. I had always assumed they were a largely American
| construc
|
| The Finnish HOAs are a uniquely Finnish construct. They
| are in many ways different from the American HOAs, even
| though the name is the same.
|
| > That said, I still it baffling that someone would try
| to exert control over what you do with the inside of your
| own home.
|
| In the Finnish system, as a "homeowner" in a HOA, you
| actually don't own things such as... the walls inside
| your apartment. The HOA owns the walls. You own a piece
| of the HOA and the right to live inside the walls. But if
| you want to fix damage inside the walls, for example, you
| need the HOA to do that, because they own the walls.
| lpapez wrote:
| > Not everything is a purely financial decision. A home is
| primarily a place to live, not an investment opportunity.
|
| I am always shocked at how many people simply don't
| understand this.
|
| For example: no matter how many index funds I buy, I will
| still have to find a landlord who allows pets in their home
| if the current landlord decides to kick me out for a better
| tenant (whatever that means for them).
|
| I don't have to deal with that in my own home. My home, my
| rules. And this is worth more to me than knowing I optimized
| my investment portfolio.
|
| Human dignity has value. Shelter security has value. Knowing
| that you won't be moving in the next few months has value.
| But the value of these things cannot be measured in dollars.
| Carrok wrote:
| I have rented for the past 20 years, the vast majority of my
| adult life. We are buying soon.
|
| Could I make more in an index fund? Sure, probably. But I can't
| make a rental into what I want it to be, you are often not even
| allowed to paint the walls.
|
| I can't plant a garden in an index fund.
| onion2k wrote:
| That definitely wasn't the case in the 1990s through to about
| 2020. House prices doubled about every 10 years in some areas
| while interest rates were about 2% on average. Housing has been
| _by far_ the best small investment open to most people.
|
| The problem now is that property buying at scale for the long
| term is a model private funds are trying, interest rates are
| going up, and housing supply at the lower end of the scale is
| constricted because there's no profit building those houses.
| All of which means people who want to buy a house rather than
| pay a landlord are basically screwed.
| listenallyall wrote:
| Not disagreeing with the general assessment however let's
| stick with facts... mortgage rates decreased during much of
| that period but were still above 6 through most of the 90s
| and even at the lowest, didn't get all the way down to 2.0%
|
| https://fred.stlouisfed.org/series/MORTGAGE30US
| Tiktaalik wrote:
| Even aside from the many places where there has been a clear
| financial advantage to home ownership, a core value that drives
| desire of home ownership is stability of tenure. The control
| over ones destiny and the nigh impossibility that one could be
| forced to move has strong value.
| baobabKoodaa wrote:
| That "control" is mostly a fantasy. I own an appartment and
| when I found mold damage I wasn't able to just fix it, I had
| to take the housing association to court and fought with them
| for 2 years. It's now fixed and I'm trying to sell the
| appartment and nobody wants to buy it. Then I read articles
| like this and it just makes me laugh at the absurdity of it.
| gwbrooks wrote:
| In the U.S., only about 30% of homeowners are subject to
| housing associations.
|
| I get how that seems odd if you live in a big city, a
| multifamily building, etc. -- associations and their
| problems are ubiquitous there. But it's not the experience
| of most American homeowners.
| madmask wrote:
| Independent house is the way
| carlosjobim wrote:
| > nobody wants to buy it.
|
| Of course there are tons of people who want to buy it, but
| not for the price you are demanding. You are unrealistic
| about price.
| dahart wrote:
| I've heard this argument a lot on HN, and yes it can be argued,
| there are valid points, but personally I think it ignores some
| realities. First, the article is pointing out that housing
| prices are high enough that a growing number of people can't
| afford the down payment. Second, for people who barely have the
| down payment, it takes a _lot_ of discipline (and faith) to
| park all your money in the stock market and not spend it. It's
| one thing when you invest disposable income, and another
| entirely to gamble your life savings. Plus index funds aren't
| always outperforming real-estate, so you can't base the
| argument on only the last 5 years. Usually this argument has
| come in the form of suggesting that the _best_ stock market
| returns out there exceed real estate inflation, and so you have
| to be a savvy investor and stay on top of your stocks day-to-
| day, which is a very tall order for the bottom half of the
| population.
|
| Okay on top of all that, a down payment is 20% of the cost of a
| house. Buying the house is perhaps a little more like a
| leveraged loan. If the stock market and real-estate were to
| both inflate by the same amount, your investment in a house
| gets you 5x the return that your down payment investment makes.
| In the mean time, all the money you pay in rent goes down the
| drain, whereas all the money you pay into the house above the
| down payment comes back to you when you sell the house. From my
| point of view, a house seems like a _far_ better investment,
| when you factor in the rent you lose. And historically home
| ownership has been the single most important wealth-building
| tool for the average US citizen.
|
| It is legitimately concerning that the median house price is so
| high, and the trend is continuing upwards. Some of the fuss is
| concern over the future potential of a crashing economy, and
| yes that certainly will give us bigger things to worry about.
| arp242 wrote:
| People just want a house to live in. That's it. They don't want
| a "broad based index fund" or investments or anything else.
| They just want a house to live in. With all the stability that
| comes with it. And then spend their free time doing more useful
| things. Also it doesn't scale; we can't all be investing all
| the time.
|
| This kind of reductionism where everything boils down to
| financials is exactly how we ended up in this mess to start
| with. Maybe we shouldn't have structured everything around that
| because ... people just want a house to live in.
| alex_duf wrote:
| Surely you can see the difference between giving away a
| significant portion of your income to your landlord, or paying
| towards your mortgage.
|
| In one case you can sell your property and get your money back,
| so you can decide to do whatever you want with it (like index
| fund if you so chose). And in the other it's your landlord
| who's either paying their mortgage with your money, or placing
| it in said index fund...
| jandrewrogers wrote:
| At least in many parts of the US, the financial loss of
| renting is currently less than the financial loss of a
| mortgage, after subtracting contribution to principal. In
| Seattle there are places where renting is $2k+/month cheaper
| than the non-principal carrying costs of the same place.
| Buying it instead of renting it would literally be lighting
| $2k/month on fire that you don't need to. A renter can invest
| that extra $2k/month, so they come out ahead.
|
| The cost structure of landlords is often very different than
| the cost structure of new homeowners. They can make a tidy
| profit charging rent that is significantly lower than your
| mortgage payment.
| baobabKoodaa wrote:
| I had the exact same thoughts as you when reading the article.
| It seems that many people are irrationaly fixated on home
| ownership as some kind of magical pathway for wealth. When you
| ask these people to put some numbers on paper, that magic goes
| POOF pretty fast.
| cm2187 wrote:
| Depends when. A home is a leveraged investment, plus often
| exempt from capital gain taxes. If you bought it at the
| beginning of a large real estate bull market you probably did
| better than an unleveraged investment in the S&P.
| LouisSayers wrote:
| I have this feeling too and recently started making a
| calculator which I intend to add a comparison for
| (housecalculator.co.nz)
|
| Of course reality is nuanced - a friend of mine for example is
| building out essentially his own apartment in his garage and
| having his sister pay rent for his house.
|
| I'm still not sure how best to add a "compare buying to
| renting" feature for the calculator, so any ideas are most
| welcome!
| djbusby wrote:
| My favorite features of mortgage vs rent is that mortgage is
| constant.
|
| So, in 10/yr I'm still paying $2000/mo while rents have moved
| to $3200/mo
| sunshowers wrote:
| This is a creation of the US federal government -- a 30 year
| fixed makes no sense without government intervention, since
| that is an absurd level of interest rate risk the bank would
| need to take. I don't know of any other country with 30 year
| fixed mortgages -- most have something similar to the 5/1 ARM
| as the main option.
|
| edit: Seems like Germany has fixed mortgages but makes it
| hard to refinance.
| fortran77 wrote:
| I can't imagine there won't be a major crash soon and then Biden
| will shift from shoveling more printed money to new "homebuyers"
| (his $10K tax credit and his proposed $400/month grant for the
| first 4 years) to printing more money to bail out the industry he
| propped up.
|
| The only solution, of course, is to build more houses! Build
| until prices fall! (And don't bail out people who are now
| underwater because prices fell.)
| ayakang31415 wrote:
| I am sure people are priced out of "desirable" places. I don't
| think this can be fixed by oversupplying homes in specific areas.
| You need to incentivize people to move into low dense areas.
| ch4s3 wrote:
| Why would we want a public policy that spreads people out?
| There are great economies of scale in dense urban areas, not to
| mention climate and other environmental factors.
| Carrok wrote:
| The reason no one else lives there are the same reasons I don't
| want to live there. Not everyone will be happy living in the
| middle of nowhere. I'd wager most wouldn't.
| madmask wrote:
| Exactly, move out of the city where conditions are better. With
| remote work or a couple of commutes a week should be feasible
| for many.
| patall wrote:
| Are mortage rates that high everywhere in the US? 7%, or 6.625%
| sound ridiculous to me in norther europe. I pay 4.54% now with
| roling 3 month-fixed rates, but its going down now, and I could
| get it for 3.55% if I fixed it for 5 years. 30 years fixed is
| pretty much impossible here in Sweden. But you get ~30% of your
| interest back as tax deduction, so effectively I am borrowing at
| ~3% (in SEK). Which, again, is cheaper than 4.5% in the US in
| 2019!!!, a time when my parents could borrow 20 years fixed at
| ~2.2% (in the euro zone).
| sneed_chucker wrote:
| The majority of mortgages in the US are fixed rate with a 30
| year term. Mortgages originating now will have a rate in the 7%
| ballpark. In 2021 you could get mortgages with a 2.5% fixed
| rate.
|
| However, it's common for people to refinance down to a lower
| rate when they come available, so lots of American homeowners
| have rates in the 2-3% range.
| patall wrote:
| Makes sense, thank you! Actually that would go in line with
| my suspicion that 'the market' predicts/trends towards a 2
| USD = 1 EUR rate within one or two decades.
| tmnvix wrote:
| People intuitively jump to the conclusion that the problem is
| caused by a lack of building. While more building would help, a
| lack of it isn't the main cause of this problem.
|
| Ask yourself, do Canada, Australia, New Zealand, the US, Britain,
| Ireland, etc, all have the same inability to build or is there
| maybe some other common cause?
|
| In my view this is symptomatic of a more fundamental issue -
| global asset price inflation driven by a broken financial system
| (i.e. a system being artificially pumped up with cheap credit).
| Housing is just where the rubber hits the road and regular lives
| are directly effected. Just look at the tight correlation between
| the increase in the money supply and property prices.
|
| For those who insist that the number of properties is inadequate,
| take a look at the numbers for each of the countries I mentioned
| in the first chart here:
| https://www.oecd.org/els/family/HM1-1-Housing-stock-and-cons...
| (Total number of dwellings per thousand inhabitants, 2022 and
| 2011).
|
| This is a problem of underutilisation in my view. Too many
| properties are being used as investments and not as a primary
| residence.
|
| Cheap credit causes an increase in demand. This is not demand for
| homes but additional 'artificial' demand for properties as
| investments. Think short term rentals, second homes, land banked
| properties, etc. By definition, only investment properties can be
| underutilised - owner occupied homes are occupied! So in an
| environment that encourages property investment you will see more
| underutilisation.
|
| What will cause prices to fall is higher interest rates. This is
| what has been happening in NZ.
| jachee wrote:
| > This is a problem of underutilisation in my view. Too many
| properties are being used as investments and not as a primary
| residence.
|
| I've believed for a long time that heavily taxing income from
| second+ properties, similar to capital gains, would help reduce
| rent-seeker hoarding, to help free up and reduce the cost of
| properties for primary-residence owners.
| tmnvix wrote:
| Yes, any government that was serious about addressing this
| issue would take measures to decrease the incentives for
| property investment. Instead in most of the countries I
| mentioned property investment enjoys benefits that other
| forms of investment don't (tax, leverage, etc).
|
| Personally, I think LVT would be the best approach.
| Glyptodon wrote:
| Thing is, rental buyers really only make out well because
| they can rent places for more than their purchase/mortgage
| equivalent. If supply were large enough, I'd think rental
| rates below the average monthly mortgage payment would be
| more widespread and tend to make rental property ownership
| less appealing.
| jachee wrote:
| The problem is that there's enough demand out there--as
| capital seeking to be invested--to keep supply constrained.
| WalterBright wrote:
| Taxes on rental income are already more than capital gains
| tax rates.
| jachee wrote:
| Then they need to be at least doubled, and funneled into
| individual owner-occupied housing subsidies.
| anon291 wrote:
| We tried subsidizing individual housing and caused the
| 2008 recession. It's better to let the homes be owned by
| those who will pay up whether their renter does or does
| not. A landlord provides a valuable insurance service in
| some ways.
| anon291 wrote:
| People don't buy vacation homes in generic suburb #5 which is
| where most people statistically want to buy homes.
|
| Vacation homes are in beautiful tourist areas. That can be a
| problem for local workers but I doubt this is much of a
| problem for most markets.
| FactKnower69 wrote:
| 1000%. I will never get tired of teaching people (it's news to
| every single one of them!) that at any given time, there are
| more than 20 empty housing units in the United States for every
| single homeless person on the street
| (https://www.self.inc/info/empty-homes/). There _is not_ , nor
| has there _ever been_ , anything resembling a "housing
| shortage". We live in a post-scarcity world as far as housing
| is concerned, and have for centuries. There is absolutely no
| barrier to housing every single human being beyond greed.
|
| The entire framing of the issue as a false NIMBY/YIMBY
| dichotomy is a distraction from the reality that there is not
| and has never been a supply issue. The only issue is artificial
| demand from speculators who choose to withhold and deny a basic
| human right in the hope that it might magically raise in value
| for no reason instead of depreciate like every other asset.
| linguae wrote:
| I'm curious about how these empty homes are distributed? Take
| California for example, where there are 19 empty homes per
| homeless person according to the link provided. But where are
| these empty homes in California? If they are
| disproportionately located in areas far from employment
| opportunities, then this suggests that we still need to build
| more housing near employment centers. But if there are plenty
| of vacancies in areas close to job centers, then this is
| definitely something that needs to be looked into more
| closely.
| aegypti wrote:
| A surplus of housing in Madison, WI is irrelevant to someone
| living and working in NYC, which has a severe housing
| shortage.
|
| We are still subject to space time.
| jayski wrote:
| so could this be resolved by having a high tax (~50%) on
| second/rental/investment homes?
| Plasmoid wrote:
| So... where would renters live?
| adolph wrote:
| Rent controlled public housing. These could be mass
| produced and stacked like legos so that rents would be
| less than 1/3 of UBI. With the addition of municipal
| broadband there would be plentiful jobs for teleworkers
| in virtual call centers to provide a back end for no-
| checkout stores and providing teaching assistance to
| students using MOOCs.
| Wool2662 wrote:
| In their own houses. That's what cooperatives are for.
| Also prices would drop once speculation on housing is no
| longer profitable.
| Plasmoid wrote:
| How much do you think prices would drop? Sure a lot of
| supply is now on the market, but for buyers it's "20%
| down or your sleeping in your corolla".
|
| What about people living in an area temporarily? People
| who just moved?
|
| Honestly, these ideas come across as you personally being
| ready to buy but wanting a lower price rather than
| wanting a more sustainable housing market.
| twojacobtwo wrote:
| Private investors aren't the only way to have rentable
| properties.
|
| And with not for profit housing, rent is much cheaper and
| gives a much greater opportunity to eventually no longer
| need to rent.
| rascul wrote:
| Rents would go up to cover the tax increase.
| dicudbxbwv wrote:
| Are you "teaching" that because some 2% of housing units are
| empty we don't have a shortage? Because I don't think any of
| economy, capitalist or not can reasonably obtain 100% use of
| any resource. 98% is pretty dang efficient and I think is
| actually a counterpoint to what you're trying to argue.
| aeyes wrote:
| If this was true you should be able to build a new house for
| much less than the asking price for existing houses but
| unfortunately that is not the case either.
| WalterBright wrote:
| A lot of houses are empty simply because they are for sale.
| It's not unusual to take 6 months to sell.
|
| Nobody is going to want homeless people living in it in the
| meantime.
|
| Houses are also "empty" while they are undergoing renovation.
| tmnvix wrote:
| Definitely true. Probably also worth considering that
| during a speculative boom there is a lot more turnover
| which will increase the proportion of properties sitting
| empty while they are on the market (not sure how
| significant this would be but another example of how a
| booming market can lead to a decrease in properties used as
| a permanent residence).
| joecool1029 wrote:
| > A lot of houses are empty simply because they are for
| sale. It's not unusual to take 6 months to sell.
|
| A thought: Disincentivize having them for sale for too
| long, tax a % of the listing price every year it's on the
| market. That way gougers get penalized for crazy asking
| prices and there's some additional negative price pressure.
| iteria wrote:
| All that would result in is less transparency. People
| wouldn't put their house openly for sale anyone and you'd
| just create informal market places. Or worse people would
| just hang onto properties and not sell them at all,
| biasing towards turning houses into rentals.
| thelastgallon wrote:
| They are already paying mortgage principal and interest,
| property taxes, utilities and maintenance.
| j7ake wrote:
| Your statement aggregates across cities with different job
| opportunities and economic outputs. You need to look at
| specific cities with housing problems, and ask whether
| building more houses in that specific city would alleviate
| housing shortages.
| sunshowers wrote:
| This is simply not correct once you account for the fact that
| people do not like to be uprooted from the communities
| they're part of. We are simply not in a post-scarcity
| situation for housing, and YIMBYism is essentially correct.
|
| Homelessness is the most visible sign of a much larger
| systemic problem. For example, it's quite likely that many
| homes today are overcrowded, and people don't have as much
| space to live as they desire. This is bad! Not as bad as
| homelessness, but depending on the specifics still quite bad.
| The good news is that building vertically permits more
| private space per person, so we don't just have to accept
| things getting worse.
| Redoubts wrote:
| > I will never get tired of teaching people (it's news to
| every single one of them!) that at any given time, there are
| more than 20 empty housing units in the United States for
| every single homeless person on the street
|
| Are you suggesting we deport homeless people from cities with
| low vacancy rates, to cities with high vacancy rates?
|
| > There is absolutely no barrier to housing every single
| human being beyond greed.
|
| I suspect your answer to the question above will reveal a
| barrier.
| anon291 wrote:
| Homelessness has nothing do with housing because there is no
| such thing as being unsheltered due to inability to afford a
| home in the United States. By and large those who can't
| afford a home use one of the myriad programs available to
| give people homes.
|
| The unhoused vagrant problem is 100 percent drugs
| shuckles wrote:
| > People intuitively jump to the conclusion that the problem is
| caused by a lack of building.
|
| In my experience, people "intuitively" jump to basically every
| conclusion besides this one. "Greedy landlords" or "[favorite
| scapegoat] collusion" are intuitive conclusions which are far
| more common than supply and demand.
|
| > Ask yourself, do Canada, Australia, New Zealand, the US,
| Britain, Ireland, etc, all have the same inability to build or
| is there maybe some other common cause?
|
| Yes they do, to varying degrees. The Anglo land use regime is a
| disaster.
| NegativeLatency wrote:
| I only have firsthand experience in the US but it makes a lot
| of sense to me that the influence of colonization by Britain
| would cause all of the listed countries to have similar
| issues related to land use.
| alexpetralia wrote:
| Asian countries have a lot more people and build a lot more
| housing.
| Wytwwww wrote:
| > Yes they do, to varying degrees. The Anglo land use regime
| is a disaster.
|
| Population growth (which is mainly concentrated in relatively
| small number of areas) is not helping either.
|
| e.g. in European countries which have comparable population
| growth to Ireland/UK like Norway, Sweden, Belgium real estate
| prices have been increasing at a similar pace.
| aegypti wrote:
| The OECD link you've provided shows the complete opposite of
| your point.
|
| The UK, Ireland, Canada, and New Zealand are at the bottom of %
| vacant dwellings indicating the opposite of underutilization.
| tmnvix wrote:
| It's the difference between 2011 and 2022 that I was
| highlighting.
|
| Unfortunately the document doesn't show changes in vacancy
| rate.
| aegypti wrote:
| The difference showing that Ireland, Canada, New Zealand,
| and the US had either the same, or more dwellings per
| thousand inhabitants in 2011 than 2022?
|
| I don't know if I'm just misunderstanding your point, or
| misreading the material, but that is also not an example of
| underutilization.
| tmnvix wrote:
| My point is that the relatively static proportion of
| people to dwellings in those countries over that period
| suggests that a supply shortage is not sufficient to
| explain the accommodation crisis.
|
| What I am suggesting is that incentives to invest in
| property have led to an increase in the number of
| properties that are not being used as a primary residence
| (i.e. are underutilised) and that that is the most
| significant factor causing the shortage of _available_
| homes.
| ivan_gammel wrote:
| Iirc, 20% of all bedrooms in UK are spare bedrooms in houses
| that are too big for their owners. This is indeed
| underutilization.
| Macha wrote:
| As someone with spare bedrooms, this itself is a problem of
| undersupply. If you can't be sure of being able to trade up
| when you need to (e.g. after starting a family) because
| house prices are up 100% in 10 years, then you're going to
| want to buy a house for all possible future needs, rather
| than current needs.
|
| Add to that, things that might be desirable for other
| reasons, like garden space, rooms for use as offices, large
| kitchens, etc. all tend to scale with bedroom count too.
| ivan_gammel wrote:
| House ownership is higher among boomers, who are not
| going to have children anyway. Maybe for some people
| concern for future prices is a good reason, but certainly
| it is not for everyone. If there's spare capacity enough
| for 20% more people and population growth forecast by
| 2050 is just one third of that, you cannot really talk
| about undersupply, when there's enough accommodation to
| cover even future demand.
| throwaway22032 wrote:
| Underutilized would imply that it's literally useless dead
| space.
|
| I have more rooms in my house than people, they have
| purposes.
| ivan_gammel wrote:
| UK census differentiates between rooms and bedrooms, so
| indeed an unused bedroom is likely a dead space.
| throwaway22032 wrote:
| My home is listed as having more bedrooms than people.
|
| They are not dead spaces, and they wouldn't somehow
| become more useful if I knocked a wall or two through to
| reduce the room count or reclassified them.
| wyre wrote:
| Are you purposefully being obtuse? The point is the
| difference between bedrooms, bedrooms used as offices,
| etc, and spare bedrooms. You can have more bedrooms than
| people and fully utilize the rooms not being used as
| bedrooms; the statistic is 20% of rooms are being
| underutilized ie spare bedrooms that don't get used.
| toasterlovin wrote:
| Just to conceptualize this, it's like every 5 bedroom house
| having 1 unused bedroom, perhaps being used as an office.
| Of course, most houses don't have 5 bedrooms, so in reality
| this is an extra bedroom for every 2 houses. Again,
| possibly being well used for another purpose. That doesn't
| seem like a lot of underutilization to me.
| ivan_gammel wrote:
| Rooms used for another purpose are not called bedrooms.
| See yourself: https://www.ons.gov.uk/peoplepopulationandc
| ommunity/housing/...
| nemomarx wrote:
| How does a guest bedroom get counted, out of curiosity?
| roenxi wrote:
| And they have below-expected dwellings per 1,000 residents.
| The "Total number of dwellings per thousand inhabitants, 2022
| and 2011" suggests there are potential supply problems.
| brabel wrote:
| In Swedish big cities, prices are also ridiculously high
| despite investment in properties being much harder than in
| Australia or the US due to some strict rules regarding renting
| out. I live here now but lived in Australia before. Prices in
| Stockholm are more or less on par with Perth or Brisbane I
| think (i.e. crazy, but not at the completely off-the-charts
| Sydney prices, at least... when I lived in Sydney like 20 years
| ago I remember you already needed half-a-million to get just an
| average house... today it's like well over a million to get
| anything at all).
|
| Can confirm that as interest rates went up, people just can't
| afford the enormous loans anymore and prices of houses (and
| apartments to a lesser extent as they're a bit cheaper overall)
| fell, up to 20% at the worst, I believe. But as soon as
| interest rates are expected to go down, prices already shoot up
| again (even while interests are still high as people and banks
| estimate how much they may expect to spend in the near future).
| neilwilson wrote:
| The issue is always lack of building. Higher interest rates
| just mask the problem and hand more money to rich people for no
| effort.
|
| The problem is that the private housing production system
| responds to increased credit availability only at the margins
| and does not over produce. That's largely because houses are
| still hand built and not really substitutable like a vehicle.
| You don't generally have a choice of two houses on the same
| site.
|
| However if you produce houses publicly then you can force
| private housing to compete outside the margins. At which point
| you get excess supply, as we see with cars and then house
| prices start to stabilise and even depreciate. At which point
| the "investment" hoards would start to liquidate.
|
| We need the housing market to behave like the production car
| market, not the classic car market.
|
| The fix is public policy producing housing in order to force a
| situation of excess supply.
| killjoywashere wrote:
| > The fix is public policy producing housing in order to
| force a situation of excess supply.
|
| So... we should have paid builders to build more houses
| during the pandemic?
| pfdietz wrote:
| Eliminate regulations and laws limiting supply.
| AmVess wrote:
| Where I used to live, it cost $7k to get a plot of land
| ready to build on. Today, that cost is $70k and 6months
| to 1y to get past all the permits and paperwork. And then
| having to deal with a governing body that doesn't
| understand how money works, and it is no surprise no one
| builds affordable houses anymore.
| Chris2048 wrote:
| > look at the numbers for each of the countries I mentioned in
| the first chart
|
| The number is irrelevant - people want to live in desirable
| areas where's there are jobs, and are constrained as such.
| Rebuilding high density in towns and cities is an issue, as
| well as maintaining decent services ( hospitals, roads, public
| transport, post office etc).
|
| You say that houses are being treated as investments, that's
| why these crises happen; but then why are building materials
| and tradespeople also at sky-high prices (in Ireland)? Is it
| all competition on investment building?
| tmnvix wrote:
| > why are building materials and tradespeople also at sky-
| high prices (in Ireland)?
|
| Similar issue in NZ. Cost of building materials was getting
| extreme. There's an argument to be made that these are linked
| to profitability of building and so increased during the
| speculative boom. Helped along by the fact that many
| suppliers are monopolies. Cost of building materials has
| however started falling considerably since the property
| market crashed here. Likewise the cost of labour and building
| quotes overall.
| dan-robertson wrote:
| > do Canada, Australia, New Zealand, the US, Britain, Ireland,
| etc, all have the same inability to build ...?
|
| Sort of? See eg
| https://www.ft.com/content/dca3f034-bfe8-4f21-bcdc-2b274053f...
| for some graphs that show Europe vs anglophone countries in an
| obvious way. Obviously there are lots of differences between
| the countries, eg the specifics of their planning systems and
| economies. The US is different because of the big diversity of
| local governments - housing is affordable lots of people
| outside of desirable cities, and places like Austin and Houston
| do build lots of homes and that seems to be a possible reason
| they haven't grown like prices in California.
|
| Credit costs have followed similar trends everywhere (obviously
| there are differences, especially in the US) and yet house
| prices have not followed similar trends but rather behaved
| differently in different places. I agree that when interest
| rates are lower you should expect to see higher prices, but
| that's because interest rates change the price that a given
| income can afford. I don't think interest rates are good at
| explaining the changes to affordability over time, or why
| affordability is different in different places.
|
| Also, in your linked chart, you see something like 20% more
| dwellings per person in developed EU countries vs English-
| speaking countries, which doesn't feel like no difference at
| all.
|
| The issue in the article of affordability becoming worse across
| the US recently is probably interest rate related - prices
| change more slowly than interest rates, 30-year fixed rate
| mortgages mean rates change more slowly, and the higher rates
| mean existing mortgage-payers don't want to move as they'll
| lose their low rate, which reduces supply. I don't know why
| prices are still up though - if interest rates being high was
| making housing unaffordable, one would expect prices to be
| down.
| tmnvix wrote:
| > you see something like 20% more dwellings per person in
| developed EU countries vs English-speaking countries, which
| doesn't feel like no difference at all.
|
| I was attempting to highlight the change in numbers for those
| countries I mentioned and how they are clearly inadequate
| when trying to explain the change in prices over the same
| time.
|
| In NZ there was little change from 2011 to 2022 but median
| house price went from NZD350k to NZD900k.
|
| I agree with regard to demand being different in various
| locations within a country, but those localised demand
| differences would have had to shift pretty dramatically over
| the same ten year period to explain much I imagine.
| Wytwwww wrote:
| > for some graphs that show Europe vs anglophone countries in
| an obvious way
|
| Housing is still extremely expensive in most major European
| cities relative to income. e.g. Milan, Lisbon, London, Rome,
| Munich are significantly more expensive than San Francisco or
| San Jose (e.g. Milan is more than 2x more expansive) if
| you're earning the median income.
|
| It's not like most people in some European countries chose to
| live in rented cramped apartments they simple have no choice
| because they can't afford anything else.
|
| > you see something like 20% more dwellings per person in
| developed EU countries vs
|
| It's not clear how much of that is because of lower (or
| negative) population growth. e.g. Italy has one of the
| highest dwellings per person ratios and there are
| towns/villages which are basically giving away houses for
| free Milan is still relatively the most(?) expensive city in
| Europe and housing in other major cities is still less
| affordable than pretty much anywhere in the US.
| Wytwwww wrote:
| > take a look at the numbers for each of the countries I
| mentioned in the first chart here:
| https://www.oecd.org/els/family/HM1-1-Housing-stock-and-cons...
| (Total number of dwellings per thousand inhabitants, 2022 and
| 2011).
|
| The statistics are skewed because the demand varies a lot
| between different regions .e.g there are towns in Italy selling
| houses for $1 (well sort off...) that doesn't mean that housing
| is affordable in Milan or other major cities. Same Applies to
| US, Canada, Ireland etc.
| WalterBright wrote:
| Two more causes:
|
| 1. People have mortgages with very low interest rates. If they
| sell the home, they give up that cheap mortgage for a much
| higher mortgage interest rate with the next home. So, they
| stay.
|
| 2. The capital gains tax exemption of $500,000 has not risen
| with inflation. Selling your appreciated home will result in a
| large tax bill. It makes sense to sit in the home until you
| die, then it gets a basis boost when transferred to the heirs.
| tmnvix wrote:
| With regard to (1), I would have to agree, though I think
| this is only the case in the US?
|
| For (2), absolutely. Tax advantages play their part (adding
| to investment demand relative to other investment options).
| Is it not also the case that interest payments on a
| residential mortgage are tax deductible in the US?
| WalterBright wrote:
| Taxes cause all kinds of distortions and inefficiencies as
| people adapt their behavior to them.
| AlexandrB wrote:
| > 1. People have mortgages with very low interest rates. If
| they sell the home, they give up that cheap mortgage for a
| much higher mortgage interest rate with the next home. So,
| they stay.
|
| This may be true _only_ in the US. In Canada, for example,
| the maximum term a mortgage rate is fixed for is 5 years,
| after which you have to "renew" your mortgage and
| renegotiate the rate. So a lot of people are already being
| forced into higher interest mortgages here.
| amelius wrote:
| Another cause: people live until an older age.
| biophysboy wrote:
| The price of a home in an area is strongly related to the
| aggregate income divided by the total number of housing units.
| Even if the numerator is significantly affected by the
| artificial credit pumping you mention, that does not mean
| changing the denominator wouldn't help.
| ForHackernews wrote:
| > Ask yourself, do Canada, Australia, New Zealand, the US,
| Britain, Ireland, etc, all have the same inability to build or
| is there maybe some other common cause?
|
| Yes! Yes they all do! None of them are producing housing at
| anywhere near the rate required.
| Glyptodon wrote:
| I agree higher rates are likely to help with prices, and that
| low rates drove asset price inflation, and purchases of non-
| primary residences, as well as rental properties, but I also
| think there's also an element of nobody being willing to
| stomach a loss leaving supply constrained. And it seems like
| maybe that can only be loosed by more supply coming from
| somewhere, while in the meantime, it means prices only get
| higher.
|
| One thing that's surprised me is that I'd expected this
| situation to lead to building being relatively cheap compared
| to buying. But land + labor + materials price increases seem to
| have left building less competitive in most areas meaning new
| supply can't actually undercut the market much, if at all. Or
| seemingly won't. It really feels like there's nothing that can
| give at the moment, like it's some kind of doom loop.
| ajsnigrutin wrote:
| Yes, it's lack of building.
|
| Half of my city and many other cities around my country were
| built during the communist 70s and 80s... and then we stopped
| building and maybe built 5, 6 apartment buildings in the last
| 30 years.
|
| Then urbanization came, centralization, everyone wants to live
| in a city.. but we're not building more housing.
|
| We can look around europe.. how many apartment projects were
| done in the 70s and 80s, and how many are being built now....
| we built whole new neighbourhoods back then, and now we have 4
| people sharing a two bedroom apartment.
| cyberax wrote:
| On the other hand, Moscow got densified to hell and back
| during 2000-s. Guess how it affected the housing prices?
| whydid wrote:
| Rare perspective, and I totally agree. Building more homes is
| like expanding roads. It doesn't solve the root problem.
| itake wrote:
| While I agree building housing is a symptom, and not the core
| problem. But I'm skeptical that increasing building or density
| would actually lower housing costs. If that were true, high
| dense cities like Beijing, Tokyo, Singapore, or Hong Kong would
| have much lower cost housing.
|
| Housing more people in a concentrated area creates more demand
| for services, which creates more demand for housing which jacks
| up prices. Packing 1,000 people into an apartment build creates
| extremely high demand for plumbing, house cleaning etc,
| services, which jack up housing prices. But if cities were low-
| density with commerce centers decenteralized across many
| neighbhorhoods or towns, you don't create location demand
| hotspots (e.g. cities) that jack up prices.
|
| Property taxes and interest rates are a forcing function to
| keep unoccupied properties in check, as long as the
| appreciation doesn't dramatically exceed the risks of being a
| LL. For Tier 1-3 markets in the USA, you can't cash flow
| properties as rent is drastically lags property ownership
| costs.
| rcpt wrote:
| Beijing, Tokyo and Singapore are not that expensive to live
| in. Especially if you're renting.
|
| Hong Kong has all sorts of crazy building restrictions and is
| a different story
| itake wrote:
| The article is specifically about purchasing homes. Even
| the USA, it also is cheaper to rent than to buy. Buying a
| home in Singapore has a 6 year waiting list to access
| public housing with properties exceeding $1m SGD.
|
| Taxes, Transportation and food costs are cheap, but
| property is not.
| Tactician_mark wrote:
| Your argument about increasing demand for services isn't
| convincing. Since there are more people in the area, should
| supply be higher as well, balancing prices?
|
| It seems more likely that costs are higher in cities because
| there are valuable opportunities for skilled people who
| demand high salaries, simultaneously encouraging dense living
| to maximize access and increasing cost of living through the
| Baumol effect. High prices causing density, not the other way
| around.
| itake wrote:
| > Since there are more people in the area, should supply be
| higher as well, balancing prices?
|
| I think we are starting a conversation about
| gentrification: Rich white-collar/coat workers move into an
| area creating demand for service work. There is some price
| competition for their service work labor, raising wages,
| but typically housing costs are too high for these workers,
| so they leave (lowering supply, pushing up wages).
| novok wrote:
| Tokyo does have cheaper housing at a income : cost ratio and
| is growing in population.
| chiefalchemist wrote:
| > In my view this is symptomatic of a more fundamental issue -
| global asset price inflation driven by a broken financial
| system (i.e. a system being artificially pumped up with cheap
| credit).
|
| Spot on. You're not alone. For a more thorough and clinical
| review of how we're f'ed and why see Lyn Alden's "Broken
| Money".
|
| To your point, ppl are fond to talk about the economy. That's a
| distraction. It's a false god. Fact: the economic system and
| the sociopolitical system both side on a foundation. That
| foundation is the financial system. Full stop.
|
| https://www.lynalden.com/broken-money/
| rcpt wrote:
| Higher rates don't do anything because incumbent owners simply
| pull houses off the market to wait it out.
|
| You need to increase carrying costs. Land value tax is the best
| way but it's about as far as you can get from what's
| implemented anywhere
| tmnvix wrote:
| I have a feeling that those hoping to wait it out in the
| hopes of a return to low rates might be caught out this time
| around.
|
| The past few decades (coinciding with the property price
| boom) have been all about ever decreasing interest rates.
| What is happening now looks a lot like a paradigm shift. I
| wouldn't bet on rates falling substantially anytime soon.
| matwood wrote:
| > Higher rates don't do anything because incumbent owners
| simply pull houses off the market to wait it out.
|
| You need a recession.
| johngladtj wrote:
| >Ask yourself, do Canada, Australia, New Zealand, the US,
| Britain, Ireland, etc, all have the same inability to build or
| is there maybe some other common cause?
|
| Do they all have zoning, urban planning requirements, and
| restrictions on what landowners can do with their property?
| Yes?
|
| This isn't a complicated issue, this is 100% a self inflicted
| "problem" that can be solved with the stroke of a pen.
|
| Pro-tip: abolish all restrictions on what landowners can build
| in the property. No licensing requirements, no filings, no
| nothing.
|
| The sum total requirement for someone to build something
| anywhere should be them asking themselves "do I have permission
| from the landowner to do this?" And getting to work.
| Arainach wrote:
| That's not a winning formula at all. When my neighbor's DIY
| grow farm in a shed burns down, the fire spreads and affects
| me. When my neighbor decides to open a diesel engine repair
| business, the noise and fumes affect me. Most people don't
| want that.
| estebank wrote:
| Segregating housing from industry makes sense, and is
| what's done everywhere, but segregating housing from
| services, like coffee shops or day-care, is a very uncommon
| thing globally.
| sydd wrote:
| IMO the main issue are zoning laws and urbanization. You can
| find lots of articles about rural areas, small villages
| elsentially dieing out, while large cities just (try) to grow
| larger.
|
| Also there is a shift from people living in families to living
| single or just with one person which is more inefficient and
| requires more space.
| JumpCrisscross wrote:
| > _do Canada, Australia, New Zealand, the US, Britain, Ireland_
|
| You picked culturally-similar countries with common law systems
| and a history of local zoning.
| cgh wrote:
| Yes, at one time it was estimated that roughly 1/3 of
| Vancouver's condo supply was vacant. So the city implemented an
| empty homes tax [0] and promptly raised $115,000,000 in tax
| revenue [1].
|
| However, the tax is still far too low and it contains various
| loopholes that allows developers to hold condos empty for years
| until deep-pocketed buyers show up [2].
|
| Vancouver isn't unique. Housing is being traded like poker
| chips everywhere, often but not always by ultra-wealthy foreign
| nationals with zero regard for the local consequences.
|
| [0] https://vancouver.ca/home-property-development/empty-
| homes-t...
|
| [1] https://dailyhive.com/vancouver/vancouver-empty-homes-tax-
| st...
|
| [2] https://vancouversun.com/news/local-news/dan-fumano-some-
| new...
| ZoomerCretin wrote:
| Vancouver has obscene housing prices because the city and the
| politically connected spend tens of thousands of hours
| fighting against any new housing, and any new supply. Just
| look at what happened when the Squamish Nation decided they
| were going to build high rises on the land they were given:
| https://reason.com/volokh/2024/03/14/canadian-indigeneous-
| na...
|
| The entire city and all of the NIMBYs cried about their
| "neighborhood character" and tried every legal trick they
| could to block the development: threatening to not connect it
| to utilities.
|
| Vancouver literally has single family homes within half a
| mile of downtown! Clearly there is room for growth.
| dzhiurgis wrote:
| > is there maybe some other common cause?
|
| Immigration. It's not that immigrants buy up the houses
| (opposites, we tend to live cramped up in flat shares). It's
| that they support landlords profits (with cream on top of not
| knowing your rights) and have overall pressure on market.
|
| Building should at least match immigration/population growth.
|
| Also not building dense enough. Kiwis always tout "I wouldn't
| wanna live in a house without a backyard" - well I don't wanna
| rent forever either. Given choice of no housing and shitty
| housing I choose shitty housing.
| ZoomerCretin wrote:
| This is akin to denying the existence of climate change or
| evolution, or that the Earth revolves around the Sun.
|
| Yes, housing prices are determined by supply and demand.
|
| This was found to be true by a California Circuit of Appeals:
| https://x.com/CSElmendorf/status/1774115015551074434
|
| This is found to be true by Blackstone, who frequently notes
| that shortages and low increases in new supply are fundamental
| to their strategy of buying and building housing for rent:
| https://x.com/RikAdamski/status/1643477536695803904
| https://x.com/IDoTheThinking/status/1378737834824060931 "We
| could also be adversely affects by overbuilding or high vacancy
| rates of homes in our markets, which could result in an excess
| supply of homes and reduce occupancy and rental rates."
|
| There are plenty of sources which show a strong correlation
| between new supply and housing prices:
| https://x.com/sam_d_1995/status/1762597879154123241
| https://x.com/JeremiahDJohns/status/1761205726230216943
| https://x.com/ArmandDoma/status/1770961181093859375
| https://x.com/jayparsons/status/1761028332781478227
| (STRONGEST:)
| https://x.com/JeremiahDJohns/status/1761205728356802806
|
| There is plenty of unused space in our cities for new housing:
| https://x.com/ftw_cool/status/1779228107754623084
|
| Texas vs California; Texas builds a lot and has lower housing
| price growth, California builds little and has high housing
| price growth:
| https://x.com/jburnmurdoch/status/1760995124690231526
|
| This effect holds regardless of if the new housing is
| "affordable", "below-market rate", or "luxury":
| https://x.com/jayparsons/status/1712110658601255211
|
| That supply and demand applies to housing has been reported
| repeatedly in the news:
| https://x.com/AlecStapp/status/1757939504126832802
|
| Lots of new apartments have been built lately. The effect on
| rent growth is obvious:
| https://x.com/mnolangray/status/1755818637750161540
|
| Landlords themselves acknowledge the difficulty of finding
| tenants and getting high rents when there is a glut of housing
| inventory: https://x.com/sam_d_1995/status/1752346758254887132
|
| Surprisingly, supply and demand also affect housing prices in
| the Midwest:
| https://x.com/StatisticUrban/status/1752008654734147718
|
| Real estate investors and landlords acknowledging that new
| construction lowers rents and increases vacancies in their
| properties: https://x.com/SmackTrout/status/1652396524389961731
| tmnvix wrote:
| I am not denying that the number of properties relative to
| people has an effect - but I am arguing that this is
| insufficient as an explanation for what has happened with
| regard to prices recently.
|
| See my earlier comment regarding NZ. The number of homes per
| 1000 people changed very little between 2011 and 2022. At the
| same time prices went from NZD350k to NZD900k.
|
| I think my suggestion that finance is the most significant
| factor here is a stronger argument than a supply shortage.
| ZoomerCretin wrote:
| You clearly did not look at any of my sources.
|
| >I think my suggestion that finance is the most significant
| factor here is a stronger argument than a supply shortage.
|
| You have zero evidence for this claim and cited zero
| sources.
|
| >The number of homes per 1000 people changed very little
| between 2011 and 2022. At the same time prices went from
| NZD350k to NZD900k.
|
| You cannot look at an entire country's housing/population
| ratio and think that explains everything. New homes in
| Queenstown don't reduce housing costs for people in
| Auckland or Christchurch. You need to look at the supply of
| housing in an area where it is a substitutable good: where
| you can switch housing without switching your job, school,
| friends, and life.
|
| A new house 6 hours from me does not lower the price of
| housing in my neighborhood.
| anon291 wrote:
| It's especially dumb because while as a whole rents are
| increasing in America, there are many desirable parts where
| it's not. Texas has decreasing rents despite an increasing
| population
| Cheer2171 wrote:
| Seattle is building far more than many other cities and rents
| are lowering as a result. Rents are up nationally, but down
| over 7% in Seattle. If you've visited recently, the amount of
| new construction and cranes is immense.
|
| https://www.forbes.com/sites/hyunsoorim/2024/05/20/here-are-...
| api wrote:
| I agree that there's more than one factor, but not building
| enough is absolutely a major one. There's tons of data to back
| this up.
|
| Another one is the hyper-concentration of high paying jobs and
| other opportunities in a small number of cities.
|
| There's always been a power law distribution for cities and
| opportunity with larger cities tending to win out, but since
| roughly 2000 it seems like it's greatly intensified. I've asked
| this question to many older people and have looked up some
| stats and both back up the sense that this has gotten
| significantly worse in the last 2-3 decades.
|
| In the USA if you are not in one of maybe six cities you are
| second-tier, and it's much harder to find high paying and
| upwardly mobile jobs. The very top tier cities of SF Bay, NYC,
| Seattle, and LA are of course fantastically expensive.
|
| Telework helps a bit but generally you still have to do time in
| one of those cities to establish yourself enough to get good
| high-paying telework jobs. Telework is often a senior-level
| thing or something you need a strong network to land.
| digbybk wrote:
| > This is a problem of underutilisation in my view. Too many
| properties are being used as investments and not as a primary
| residence.
|
| I hear this argument a lot and always wonder if the causal
| direction is flipped: people use housing as an investment
| because it's scarce, not that it's scarce because it's used as
| an investment. If there weren't so many restrictions on
| building, the supply would grow to meet the demand and parking
| your money in property wouldn't be such a hot idea.
| dools wrote:
| I don't know about those other places but Australia definitely
| has a horrendous under supply of homes
| joe_the_user wrote:
| Lack of building can play a part but even the interests that
| want housing as investment naturally want to limit supply.
|
| The main thing is that the US has been printing dollars for
| several decades - primarily to deal with or prevent periodic
| financial crises. Ben Bernacke's "Helicopter Dollars" speech
| was infamous but nothing has changed but the (increasing) scale
| (and, yes, all the central banks of the developed world are
| doing it too).
|
| Effectively, the modern order has come to involve an endless
| hand-out to those who already have money while "market
| discipline" prevails against those who don't. Of course, this
| has long term problems aside from its immorality.
| breatheoften wrote:
| Other strategies to discourage the usage of properties as
| investment have existed at various times ... Things like
| squatters rights laws have been deployed for this purpose in
| some parts of the world at various times (Netherlands for
| example had quite large movements where the youth would occupy
| empty homes owned by rich investors in order to take advantage
| of favorable (to the squatters) laws -- which discouraged folks
| from sitting on unoccupied investment properties home at least
| at some historical points in time
| SV_BubbleTime wrote:
| Ugh. Another "it's not X" post...
|
| Yes, it is. It's everything.
|
| It's inflation, it's that none of the countries you mentioned
| built anything during the covid craze (word selected
| specifically), it's regulation and complexity and permitting
| and zoning, its remote work, it's manipulated stock markets and
| poor returns on other investments, it's blackrock and VCs and
| MBAs, it's out of country investors...
|
| It's everything.
|
| So why these reductionist "well, I know it isn't X" posts are
| supposed to be insightful, I have no idea.
|
| Who told you it needs to be one thing, or can be disproven as
| one thing?
| throwaway22032 wrote:
| In the UK we basically just seem to have some variant of
| regulatory capture.
|
| The man on the street wants less immigration and more
| housebuilding so that they can start a family.
|
| The political class seem to want to just import a ton of low
| skilled foreigners because they'll take lower living standards.
|
| It's ass backwards. The solutions are obvious.
| JumpCrisscross wrote:
| "But shelling out $2,500 (PS1,960) a month in rent doesn't leave
| much left over"
|
| I've noticed roommates are not a thing for many people anymore,
| particularly among younger folk. Is this a post-Covid thing?
| FridgeSeal wrote:
| That's not my experience at all: me, my friends, everyone I
| know that lives in a city lives with housemates. I don't know
| anyone lucky or well-off-enough who can possibly afford a place
| to themselves that isn't a minuscule studio.
| JumpCrisscross wrote:
| That was my experience as well. But who is paying $2,500 for
| a room? These stories always seem to feature folks who are
| trying to live alone while saving for a home in a Tier 1
| city.
| imperfect_light wrote:
| First of all, agreed that housing prices are insane, even two-
| income households struggle to buy in my city.
|
| But taking a more long-term view, in the US the owner-occupied
| housing rate about 65%, which has not changed a ton in the last
| 50-60 years (high was 69% in 2005 and low was 63% in 1965).
| Granted the market has changed a lot, we have much bigger houses,
| and more two-income families to pay for those more expensive
| houses.
|
| https://www.advisorperspectives.com/dshort/updates/2024/04/3....
| tmnvix wrote:
| Worth keeping in mind that the typical measure of the home
| ownership rate is really a measure of the proportion of people
| living in a home with the owner. So a 25 year old living with
| parents counts towards and not against this. Likewise anyone
| else sharing the house (boarders, etc). I suspect that the
| number of people in this situation has increased in the past
| couple of decades due to housing affordability.
| imperfect_light wrote:
| The denominator in this graph is houses, not people, so adult
| children living/not living at home would have no impact.
| 8note wrote:
| The numerator is some multiplication of people and houses
| and people per houses though, with the houses and people
| counted differently on each multiplier though, so it still
| matters
| glitchc wrote:
| They're always the same reasons:
|
| - Properties in world-class cities are in demand globally
|
| - NIMBYism means it's hard to build new housing or increase
| density
|
| - Resource costs and wages are high in world-class cities
|
| The first one is a demand-side driver, the last two are supply-
| side drivers. There aren't any palatable solutions to reduce the
| impact of these drivers, at least not ones that do not negatively
| impact other sectors of the economy.
| rcpt wrote:
| The reason is always tax policy. Real estate gets ridiculous
| advantages that other assets don't.
| NoLinkToMe wrote:
| Honestly I'd love for some good data, rather than cherry-pick
| journalism. It's crazy how many news articles will simply parrot
| a narrative without actually investigating it.
|
| The discussion on housing should start with one fact: the supply
| of housing has been growing faster than the size of the
| population, decade after decade, for a very long time.
|
| This is why the number of people per home, has been dropping
| decade after decade. That is a measure of luxury. We can afford
| homes with fewer people. People can afford to be single and live
| alone. We can afford not to take in a roommate. Couples can
| afford to each have their own home. That's not an indication of a
| housing crisis or being priced out.
|
| Then there is home size, it has been increasing also, decade
| after decade. We can afford to live in bigger homes. Again, a
| measure of luxury.
|
| Anecdotes about 'my (grand)parents lived in XYZ home that's way
| bigger than mine' are just that, anecdotes. The data shows we
| live in bigger homes with fewer people, in fact we have double
| the housing that we had a few decades ago. In other words, the
| average person's lifestyle with respect to housing has greatly,
| greatly improved compared to previous generations.
|
| What is often also not mentioned is that affordability is not a
| function of prices only, but of prices x the cost of money (i.e.
| interest rates). In the 1980s interest rates were as high as 18%,
| now it's 1/3rd of that at around 6%. That's the true cost of
| housing. Taking $1000 and paying off $1000 in debt has no impact
| on your equity, you're as rich as you were before the
| transaction. Paying interest however is money you'll never see
| again. That cost was 3x as high a few decades ago. Prices haven't
| tripled when adjusted for inflation and salaries, not even close.
| That's why affordability of housing isn't the disaster that many
| people think it is.
|
| Here is an old source (2016), which you may think is outdated.
| But it shows a multi-decade trend that cuts across the same price
| increases we've seen in recent years:
|
| https://www.aei.org/carpe-diem/new-us-homes-today-are-1000-s...
|
| For another source that runs to 2020:
| https://humanprogress.org/u-s-housing-became-much-more-affor...
|
| I'm not even going into how the function of housing has changed.
| With today's connectivity (netflix, spotify, internet, food
| delivery, teams/slack, amazon etc), it has become more than ever:
| an workplace/office, a cinema, a library, a music studio, a game
| hall, a restaurant, a shopping mall. Its value has increased.
|
| No, I'm not saying finding housing is super easy for anyone and
| everyone. I recognise many find challenges. But what is simply
| not true, is that it is any more difficult than the past. In fact
| it has never been easier. What appears true however is that our
| lifestyle expectations keep increasing faster than our lifestyles
| are improving.
| spacemark wrote:
| I agree with a lot of what you are saying, but to say it is
| easier to buy a home now than at any time in the past is
| objectively untrue. Yes, houses today are much better than 50
| years ago, but the cost to entry has gone up faster than
| salaries. When my parents bought their first home, the median
| salary-to-home cost ratio was roughly 1:1. It is closer to 1:6
| today. Yes homes are more valuable today, but they are also
| objectively more difficult to purchase.
| robertlagrant wrote:
| The problem is lack of supply vs demand. In 2022,England and
| Wales:
|
| - built 254000 homes[0]
|
| - had 745,000 people immigrate (net)[1]
|
| - had 600000 people turn 21[2]
|
| - had 577160 people die[3]
|
| If you gain a load of people, far more than you increased
| dwellings for, prices will go up and dwelling size will go down.
| It's not particularly complicated.
|
| [0] https://www.savills.co.uk/research_articles/229130/357082-0
|
| [1] https://www.bbc.co.uk/news/uk-politics-67612106
|
| [2]
| https://www.ons.gov.uk/peoplepopulationandcommunity/birthsde...
|
| [3]
| https://www.ons.gov.uk/peoplepopulationandcommunity/birthsde...
| rcpt wrote:
| UK also has the Council Tax which is arguably a stupider tax
| policy than California's Prop 13
| tmnvix wrote:
| > The problem is lack of supply vs demand.
|
| My point elsewhere in this thread is a that demand is not
| entirely a function of demand for homes (what I would call
| 'natural' demand). Finance and tax incentives play a large part
| too - encouraging demand for investment properties that are
| often not used as homes (what I would call 'artificial'
| demand).
|
| This is not to say that addressing supply through more building
| is not helpful, just that there are other things to consider
| that may not require as much effort and can have broader
| economic benefits (e.g. changes to the tax system to encourage
| productive rather than unproductive investment, credit
| guidance, etc).
| adverbly wrote:
| Starting to sound like a broken record but land value tax + up
| zoning was the fix for this 100 years ago, and it still is
| today...
| tap-snap-or-nap wrote:
| Sydney has the capacity to build a highrise crown casino at the
| city centre then why can't they hire the same builders to
| continue building residential 3BDR-4BDR homes in the suburbs
| which will also allow locals to have children. I believe the
| pricing of various things involved is insane and not where it
| should be to allow this to materialise. The rents, insurance,
| wage bills and capital cost seems to be the major bottlenecks.
| ubj wrote:
| > The growing outcry has raised pressure on the US central bank
| to cut interest rates to bring relief, a move Federal Reserve
| chairman Jerome Powell has said is likely at some point.
|
| I don't think the solution is as simple as just "cutting rates".
| Low rates lead to incredibly fierce bidding wars that can drive
| up the price by tens of thousands of dollars. An acquaintance of
| mine and his wife bid $50,000 over the asking price on a house in
| the Boston area a few years ago. They were outbid by an
| additional $60,000 (total of $110,000 over the asking price).
| Another acquaintance narrowly defeated 30+ other bidders (!) to
| get his house.
|
| My wife and I bought a house last year during a time when rates
| were _highest_. Ironically, I believe this was actually a fairly
| great time to buy. Competition from other buyers was low, and
| sellers were more willing to negotiate because they didn't know
| if they would be able to sell anytime soon. And yes, we now have
| a higher interest rate, but that can be refinanced down the road.
|
| It's a complex situation. I do hope for lower interest rates, but
| I don't think that alone is going to solve the issue.
| tmnvix wrote:
| Low rates got us into this mess. It is not a solution.
| Cheer2171 wrote:
| Sounds like the asking price was too low.
| vladms wrote:
| I find it a bit strange that the article (and also a lot of the
| discussion here) does not discuss the size of these houses (in
| square meters per person), or alternatively the distribution of
| the sizes/areas.
|
| I grew up in a 20 square meter per person apartment (with
| multiple person living there, for a total size of 60 square
| meters) - and it was definitely not pleasant. But I feel that
| nowadays people also expect a lot - for example in The
| Netherlands the reported average of 65 square meter per person
| https://longreads.cbs.nl/trends19-eng/economy/figures/constr....
|
| Not discussing what it should be ideal, but if (some) people now
| want 2x or 3x what they wanted 40 years ago for example (without
| actually needing it due to a larger family), it's no wonder that
| there are issues (with prices/availability etc.).
| feoren wrote:
| The people buying up their 5th investment property are taking
| up a lot more that 65 square meters. This feels like the usual
| "you should all just get used to living in poverty so that the
| few can exploit you more." If everyone got used to 20 square
| meters, pretty soon the rich would buy the rest and then we'd
| hear "your standards are too high; you should be happy with
| 10!"
| mkl95 wrote:
| If you leave in some mid EU country, chances are a lot of your
| current government's policies are based on "sticking it to the
| man".
|
| The man used to be an upper-ish class dude (p96+), but due to how
| horribly slow and uneducated governments are at making data-
| driven decisions, the man is now a working or middle class dude.
|
| As a result, you will see property prices skyrocket in your area
| while the government takes 50%+ of your 5% pay raise, leaving you
| only some pocket change richer than before. But the property
| owners in your area will be richer every year because their great
| grandad hunted a bunch of whales or some shit, and so called
| progressive policy makers are clueless about wealth distribution.
| MainlyMortal wrote:
| U.K. view here... and I'd guess this applies the the majority of
| the world too.
|
| I was born in, grew up in and currently live in a location that
| the HN community never even thinks about. Most people in here
| have no idea of how the regular 99% live and then base their
| whole world view on expensive capital cities and hold the
| strangest views of housing.
|
| I bought my current house in the 2010s, my mortgage is still half
| the price of renting and I could manage to pay for everything by
| myself even if I were on a minimum wage. The problem isn't
| anything to do with housing it's to do with your own warped view
| on the world.
|
| I don't say this to be contrarian or to necessarily make a point.
| I want you to look up the minimum wage of your country and think
| about how literally everyone else happily lives without thinking
| twice about these things. You all live a massively privileged
| life yet these things concern you more than they should.
| feoren wrote:
| Hot take: already own a house and live somewhere with a livable
| minimum wage. You are the one who sounds like you are
| completely unaware of your own privilege.
|
| You just said that where you live, if you were on minimum wage,
| you could "manage to" pay for _half_ the price of renting.
| Think hard about what you just said here. You are saying that
| someone on minimum wage can 't nearly afford to rent. But their
| problem is their own warped view of the world. The warped view
| that someone working full time should not be forced into
| homelessness? How warped!
| renjimen wrote:
| Maybe for your location, but not in Canada. I live in a rural
| town in Canada that is several hours of travel away from any
| big city. You will typically pay at least $1200 USD a month for
| rent. A mortgage for a cheap house will cost around $2000 USD a
| month. For reference, minimum wage after tax is around $1700
| USD. Home ownership here is simply out of reach for many people
| now, and even renting is a struggle.
| rzwitserloot wrote:
| What if the common trend of 'house prices rising totally out of
| whack' amongst various locales (Canada, USA, Europe, Australia,
| China) is not.. actually, a common trend? No single explanation
| suffices; it's just coincidence.
|
| Low interest rates raise house prices. This has to be a 'duh'
| thing, really, but, governments don't really appear to 'get it',
| or, play dumb for political reasons. If, after adjusting for
| inflation and the like, the exact same house costs EUR500,000 in
| 1980 but costs EUR1,000,000 in 2024, BUT, interest rates in 1980
| are double what they are in 2024, your mortgage cost to buy that
| house is __pretty much identical__.
|
| It's oversimplified to say that this means 'real house price has
| not changed'. It still takes more money to actually buy that
| house. But, of the money you pay every month for your house, more
| of it is a weird, not very liquid investment portfolio, and less
| of it a weird form of rent. It's got all sorts of problems: Not
| everybody qualifies for a mortgage in the first place, for
| starters. But _in the end the amount of money you have to burn
| just to live in a house is identical in this hypothetical
| scenario_.
|
| One lesson you could learn from it is that everybody is whining
| and houses are just as affordable as they've always been, but
| that's not my point, and isn't really true. The point is more:
| With low interest rates, house prices skyrocket.
|
| This explains _some_ high house prices, but certainly not all.
|
| For example, China's is an utterly different explanation. Due to
| the way their government is set up, the usual benefits of a free
| market, namely that the population 'intelligence of the masses'
| their way to efficient allocation of resources isn't a thing
| china 'does', in essence. Government decides what happens. And so
| far, they've decided to build more houses than there will ever be
| chinese people to live in them. Ever. This is a bit of a problem
| today and will be far more of a problem tomorrow. But that's it.
| That's the simple, sufficient, and therefore only required
| explanation. It has NOTHING to do with how hard to it is to build
| in China (it is not), nor with population growth (it doesn't, or
| rather, a sheer and severe drop in house prices looming, that'll
| be explained by China's population glut). It's just that: They
| built way too many, and their market system cannot respond in
| kind to stop that runaway process.
|
| In europe, yes, in large part runaway NIMBYism and being at the
| forefront of ecological change, putting limits on how much
| nitrogen/co2 can be 'used up', and building does take quite a bit
| of that - has put the breaks on building. Especially combined
| with extremely low unemployment which hurts the building sector.
| "Too few houses being built" is a factor.
|
| But not the only one. And I think, not even the largest one.
|
| Yet another explanation is lack of efficiency: Fewer people
| partner up, so, more people live alone. They tend to use space
| inefficiently: They all want their own kitchen, their own shower,
| their own living room, their own bed room, their own hallway, and
| so on. A really cheap and ludicrously efficient solution to
| _that_ is dorm-style living together. Instead of having a small
| crappy single-tenant kitchen, why not have a giant luxurious very
| well stocked kitchen you share with 9 other solo tenants? Yes,
| there are all sorts of downsides to this (which lout has made a
| mess of the kitchen?!? - and nobody wants to deal with a cleaning
| schedule), but in the end it is vastly more efficient, and better
| for social cohesion.
|
| Society in e.g. europe and the US has not, yet, adapted to it. I
| hope it will. It'll solve the unaffordability of housing crisis
| all on its own if society wants to invest in it.
| amelius wrote:
| Yes, and I think there is some truth to the statement that the
| older generations are stealing from the younger generations,
| whatever the underlying financial/technical explanation may be.
|
| The game is rigged. But that should be no surprise. People who
| enter a game of Monopoly after a few rounds have been played know
| that they will be swimming against a strong current. Our
| financial systems are unfair and broken.
| ljsprague wrote:
| Tax 2nd properties 100%.
| SuaveSteve wrote:
| Not voting in psychopaths would go a long way.
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