The video [1] was interesting, although the dead comment seemed to completely ignore the video's [1] main point, where Louis talks about a hypothesis [2] where in New York City there may be an incentive structure between real estate investors and banks which is creating a market failure. The hypothesis [2] is that a building's assessed value is based on the rental prices that the landlord asks for even if nobody will reasonably pay those rents. The hypothesis speculates that, if a building's assessed value is lowered, it could trigger conditions in loan contracts that penalize the landlord or investor. Because of this, there may be an incentive for the landlord to keep buildings vacant instead of lowering their prices to market rate.
[1] https://www.youtube.com/watch?v=xfHQZj3_TX4&t=580s
[2] https://www.reddit.com/r/nyc/comments/innhah/nearly_twothird...
The factors that primarily control pricing in the housing market are supply and demand.
In Seattle, London, Los Angeles and elsewhere demand has risen steadily but supply has not. This causes prices to increase sharply.
The solution is to increase the housing supply. If the government removes regulations preventing developers from building new houses and apartments, many more will be built and prices will drop.
Many young people prefer to live in inexpensive high density housing. I remember looking at renting an apartment without a kitchen (there was a big shared kitchen for the whole floor) and without its own bathroom in my early twenties. Monthly rental price on this is around $300 per month as compared to $1,600 for a single bedroom apartment. Why aren’t there more of these? Government regulation prevents them from being built.
Government permitting processes take years to go through and cost millions of dollars for big new apartment buildings or for residential developments. If we lighten / remove these regulations, housing supply will decrease dramatically.
If you don’t want housing investors bidding up housing prices, then allow the supply to continuously increase. This will continuously drive down prices and no investors will want to buy.
Here in Australia we are seeing remarkable growth in property prices over the last quarter!
Sydney prices grew at $AU1200 per day!
In the residential housing market there just isn’t enough supply!
I can say anecdotally that’s younger buyers are being accompanied by their parents, who are assisting with finance.
Its well observed that people are queuing down the street to inspect properties, and literally writing offers out on the kitchen table!
Properties are selling on minutes, with prices being pushed up by desperate buyers with access to finance from loans with low interest rates with deposits from their parents!
When you take a 20 or 30 year mortgage, what’s $20 or $30k here and there!
That’s what’s driving prices up!
Supply and demand!
The owner of one property owns 8 other newly built homes within the city. The 2nd property is owned by a person that has 14 other properties listing them as the registered owner.
I miss the people that lived in the homes that were razed to make way for these million dollar blights on the neighborhood.
These vampire homes just accrue damage (whether the glass garage door panes start shattering, or the siding starts going, or the owner decides the landscaping should be ripped out and redone again for god knows what reason?) followed by the sons or cousins of the property owners dealing with it a few weeks later.
No value is gained by these vagrant properties existing. Less people live in my neighborhood due to it, housing is harder to find, the city and county have less reason to invest in making local transit infrastructure better.
We need to tax vagrant properties. USPS has the data on which units are not collecting their mail on a daily basis, SPU/City Light knows who is not putting their trash out or using any power or water, and voter registration records are public. We could easily start assessing a 3 cent per square foot daily vagrancy tax until residency is established at the formerly vagrant address.
This is the issue exactly. A commercial mortgage lender will insist on a certain maximum Loan-to-Value ratio. The value of the property is directly related to the long-term income that it generates (i.e., the net present value of all future cash flows). If the amounts of cash flows go down, then the value of the property goes down and the loan-to-value ratio goes up. In a commercial loan, the lender can often call the loan due at certain times during the term of the loan for any reason. One big reason to do so is if the loan-to-value ratio goes up beyond the level that the lender was comfortable with. Refinancing in such a circumstance could be very expensive. Thus, it may make more sense for an owner to keep a property vacant and lose money temporarily than to take on a tenant at a lower rent and possibly cause the lender to call the loan.
As it turns out, after 18 months, as the city comes back after the pandemic, the vacancies are now suddenly much lower. The building for 1/3 full for years.
Forgive me since I’m American, but wasn’t getting rid of foreigners taking jobs one of the selling points of Brexit?
It also exposed the loss of influence the UK had in the EU. Many provisions were carved out for them in the 80s. But when it came to the EC the EU was not making any exceptions for them this time.
Note that laurent92 talks about "Englishmen" not "British voices". That's incredibly telling.
- Staff at a restaurant is £8 an hour, that is minimum wage.
- Expect two shifts far apart, around 11am-2pm and 7pm-11pm.
- Work on Saturday and Sunday and some of the week. You will never know more than a few days ahead when you are expected to work.
It was a lie, EU citizens in the UK earn significantly more than the locals. If I wanted to be a member of the underclass, say a cleaner, I’d be in Germany, where I wouldn't have to pay 6K£ for pregnancy and 12K£pa to send a child to a half-decent primary school.
EU citizens living in the UK on average earn a lot more than the locals and are better qualified. So saying that migration from the EU was driving down wages was indeed a lie.
But even if we assume that the UK had been swarmed by millions of illiterate cretins, there isn’t any evidence anywhere in the world that immigration suppresses wages permanently (there may be some temporary short term effects, but before, you say anything, the UK has been in the EU for decades, so we are indeed in the long run).
Name a single country that succeeded to leave EU without retaliation from said EU and I’ll eat my hat. EU is not a choice for most of us on the continent. We’re not free to leave, and we were manipulated into joining.
Long story short: The simple fact that it required not 1 but 3 blatant-majority votes for elites to register that yes, UK people wanted to leave EU, is a sufficient proof that EU is not listening to the most numerous.
And let’s not even talk about the quantity of funding, sponsorship and 4x3 billboards it took to swerve Scotland’s, Wales and NI in favor of EU. Manipulation is in plain sight here.
That's what the media like to repeat, but I would suggest that you ignore them and take a broader view.
Reality is that both the UK and EU government failed to keep the population happy and continuously messed up. So much so, that the majority of people voted to leave the EU as they were discontent with their current situation. As someone who lives in the UK is that very little really has changed yet pre-brexit and post-brexit. It turns out outside of some temporary instabilities, things aren't doom and gloom. They're still crap like before though.
The only place where housing was really affordable in the UK was in Northern Ireland and sure enough, it's still very affordable in Northern Ireland.
General rule for getting on the housing ladder in the UK is the best time to buy was yesterday, the next best is now. Even if the housing market has a price crisis. It will never return to pricing to match up a decade ago; so don't live a fantasy waiting for it.
Population growth and lower family formation rates - which is hard to blame on anyone but women actually having a choice for their own lives - are much bigger reasons for price increases than AirBNB and second homes pretty much everywhere outside of the most touristy vacation destinations.
But we have fools that celebrate rising house prices because their nominal net worth went up
Everyone wants prices to remain the same forever. That takes a neutral population growth or more supply
The optimal situation is for cars and houses to be as cheap as possible relative to earnings, that's what we call economic growth and improved quality of life.
The real economy is the one that fulfills people's needs. Real-estate investment is parasitic to the real economy - it locks money away and artificially increases the price of a basic necessity. This has always been recognized in even basic economics with the concept of "rent-seeking" - unproductive activity that still makes money, such as literally charging rent.
The idea that holding a property and doing absolutely nothing with it is an "investment" is absurd. The only people who would buy that home are those who want to live in it or who want to rent it out to someone who wants to live in it.
No I wouldn't make that "investment". I would just rent the property out without "investing" the property.
And I've noticed that in the US, the observations that cars are typically depreciating assets never really stopped people from buying them.
That's exactly the problem right there. A house can be a place to live or an investment, but not both. I myself think it's a bit to silly to spend labour and resources building a concrete box for the latter purpose, so I'd much rather houses fulfill their purpose as homes for people to live in.
Certainly a place to live can also be an investment.
Just like a work of art can also be an investment.
And a plumbing business can be an investment and also fix your pipes.
If houses are to be an investment, their prices will keep rising and they become unaffordable. When consumer goods themselves are an investment, standards of living fall
The self correction should actually be the house price crashing, but the UK government consistently props up, and pumps, the market.
The average house price in Salcombe (Devon) is £950,000! That's 30 average salaries.
Interest rates have been kept low, which drives real property prices up. Everyone intuitively knows that collapse or high inflation is the endgame, so money flocks to property, which drives up demand.
The issue isn’t the coffee shop in the fishing village, it’s that the fishermen are selling real estate now and nobody actually lives in the village.
You can see this in many places. Lake George, NY is a great example - beautiful village, great location, but can only support tshirt shops from Memorial Day to Labor Day. Manhattan is the same way — the Lower East Side is like a museum of what Manhattan was like, with $2M condo apartments being randomly dropped in and 1/3 of the storefronts vacant.
However, make no mistake. The problem isn't money. Even if you buy your house with Bitcoin you will run into the same problem. The problem is that location is a a monopoly. You can tax it or let it run wild.
My former mentor bought a house on Nantucket for $150k in 1990, sold for $3.5M earlier this year. That appreciation isn’t due to inflation or the constrained supply of homes — it’s always been constrained. It’s due to increased demand fueled by excess capital.
There’s no money in traditional banking. Even with negligible interest, the spread is very tight. The only way to compete is with volume, aggregation and fee for service, and the only way to get volume is to lower standards.
IMO, we’re in an economic time period similar to the 1860’s.
That is literally a luxury good with a fixed supply. As the # of people who desire that good has sky rocketed generation to generation, of course the price went up.
There are limited production run cars from that era that underwent similar price inflation.
For someone who wants to live in Nantucket, there is literally no substitutable good!
We’re arguing the same thing. Everyone wants to go to the beach. The ability to get cash to do so increased demand.
Having more people willing to pay contributes to price increases
Or reference the points you are trying to make to make it easier to search? For instance, most of my results right now are pertaining to the civil war economies of the north / south United States
I think the the internet and technology is the equivalent to the railroads and industrialization in the 19th century. You also have the currency issues with silver and gold standards which may play out similarly to some of the crypto issues of today.
I’ve worked in a large enterprise for a long time, going from project to project that essentially automated away some semi-professional human work with automation at a 50-90% savings. Over 15 years, there’s about 35% fewer people doing 50% more work.
That trend is only speeding up. I don’t see how the current model of using cheap money to prop up real estate is a sustainable economic model.
Take with appropriate grain of salt. I’m not an economist, and my understanding is that of a layman.
Lots of land exists, the issue is desirable cities, and western countries have gotten really bad at making those.
China spent the first decade of the 21st century creating urban cities left and right, ignore the western propaganda of "ghost cities", and also spent time urbanizing what America would consider "suburban" towns.
Meanwhile western nations are dead set on never increasing the # of desirable urban environments, and then it is all surprise Pikachu when house prices skyrocket.
How do you reliably isolate the effect of the pandemic from other effects occurring at the same time?
Until one of us creates a free-ish software to help them do that ofc.
Buy it from who? Locals. So who gets the money? Locals.
But anyway the point was don’t divide people into insiders and ‘outsiders’.
The 500 are also the most likely not to be local or own the land (which means a single sale can convert a low cost apartament building in a mansion).
Also the reverse is possible...