There is no equity market (that you can trust), bonds pay nothing so property is what you invest in (or you just sit on cash that is rapidly losing value during to inflation). Ownership is recognized even by corrupt bureaucrats and courts. Ownership papers are next to sacred documents. And no property tax so zero holding costs. The perfect investment.
No legally defined ownership? No problem! The developer is working on it. They just need $30,000 USD down to secure a plot. Ownership papers will follow.
So you pile your savings into real estate. You dump every single dollar you have into speculative real estate developments.. A single family home 10 km from a major city costs more than it does in California (~$1.5M USD) and local median wages are 1/10th that of the US. You can visit developments that are nothing more than 100 homes that are concrete shells with rusting window frames. Maybe 1% occupied.
But don’t get me wrong, some developments fill up super quick. But some just die.
Want to rent a place? Fuck you. Owners aren’t banking on rent, so pay them $3k per month. It’s all about appreciation. They would be happy to leave it empty. Less hassle that way.
Seems like a recipe for a major housing crash.
But why would houses appreciate if lots of them stay empty?
They aren't buying these for the rental income. They are buying it because they hope the next person is going to want to pay even more for it.
The pattern is that an investor (Chinese) starts a project, gets a bunch of people to buy into it, a shell of a building is created and then all the work stops and is left for dead. Usually stops because someone in the chain of command didn't get enough coffee money.
Nha Trang and Da Nang are popular beach areas and rife with these sorts of things, but you also see it all up and down the coast as well as in the big cities.
Da Lat has been completely ruined over the last few years. People post before/after pictures and whole valleys that were filled with trees or farmland are now replaced with houses. It is a short enough drive from Saigon that it makes for a great weekend escape. Except there is really only one mountain road into the place...
To match the growth expansion of prices? Absolutely not.
An apartment not even within main cities or rather 2nd or 3rd tier cities will still cost 300-500k USD, is made of questionable design and safety, isn't much more than a concrete box, and you don't even full own the land but rent it from the builders who actually purchased the right from the CCP for 70 years.
Two seconds on Zillow you can see tons of properties for $300k that are neither 250sf or plastered with bullet holes.
One of many examples:
https://www.zillow.com/homedetails/205-E-63rd-St-APT-10H-New...
What you've said is true, but that doesn't mean the problem in big Chinese city is anywhere easier - the housing price is beyond afforable even for the affluent salaries. In my experience, large cities in China are more like Hong Kong where people have to work over 50 years to afford a house rather than 27 years.
I live in Beijing, and the rent I pay is around $1100 per month, but the valuation of the house is conveniently around $1.1m - it's 1k months or 83 years. As a senior software engineer, I earn a pretty decent income but it would still cost me to work several decades to buy that.
As another example for your reference, a colleague of mine - he saved money for quite some years by renting basement and spend nothing other than necessities, bought an 60m² old khrushchyovka (that old poor commie block the western world always laughing at) for around $1m. His story is very typical in China: even though he is that hardworking, he didn't afford it on it's own, but also plus his wife and 4 of their in-laws (it's so common that in China we call it "drain 6 pockets").
[1]: https://www.lincolninst.edu/sites/default/files/pubfiles/sun... see page 11
If the majority of population lives in rural areas, the prices of big cities have a major impact on the average, skewing it.
But actually people living in the big cities can afford housing more than a person with "rural area" salary can afford the average price, even though they are most likely able to afford the much lower prices in their area.
This is in stark contrast to the private houses I know of the US which may be even hauled from A to B and in my perception are more of cardboard-quality.
But my 1920s house – built very sturdily – scored a 19.5 ACH50 when we moved in, and after a not-insignificant amount of weekend work is now at a 10.33, well off from modern code even in lax areas.
Newer homes in the US often have a hole in the basement explicitly to make them not airtight. This is presumably to avoid CO2 buildup.
Below about 3.0ACH50, you generally explore active ventilation, which is why 3ACH50 is code, since it doesn't require that extra machinery.
Secondly, exposed masonry does often warrant being air sealed:
https://www.greenbuildingadvisor.com/article/insulating-old-...
https://www.jlconline.com/how-to/insulation/air-sealing-a-br...
I like how you say this like it's undoubtedly a good thing.
In Japan, old houses are rightfully considered depreciated as things like "severe regulations" and "low energy consumption" change over time as technology improves. Having a house built in the 1700s sure isn't going to be easy to solarize or insulate. So paying for 300+ years of that upfront seems pretty dumb.
In Austria, are there severe regulations on the safety of building and energy consumption of cars? I take it that it's very common to see 60, 70, 80 year old cars on the road there and they're not just disposable cardboard quality things, right?
Even newer buildings in Japan are made in cardboard, with no/little isolation, and everything is made to be destroyed 30 years down the road anyway. Disposable houses/apartments that cost an arm and a leg anyway.
> Having a house built in the 1700s sure isn't going to be easy to solarize or insulate.
You have no idea what you are talking about. In Europe, stuff built in the 1700s and still standing today were built with thick walls and will last several other centuries without any issue, and have excellent isolation (sound and heat).
Not having to deal with earthquakes helps keeping buildings up for longer.
> Having a house built in the 1700s sure isn't going to be easy to solarize or insulate.
In terms of environmental impact, there is a compromise somewhere between using houses for 3 centuries and a decade. Rebuilding all the time is worse than the gains from better insulation and higher environmental standards. It is more expensive as well.
> So paying for 300+ years of that upfront seems pretty dumb.
It’s a good thing we don’t do that, then. Nobody in Europe expect a newly-built house to last for 300 years. However, plenty of them are more than 100 years old and perfectly fine. You can improve insulation both on the inside and the outside of the building, double or triple glazing and some rock wool under the roof go a long way.
> In Austria, are there severe regulations on the safety of building and energy consumption of cars?
Yes, there are.
> I take it that it's very common to see 60, 70, 80 year old cars on the road there and they're not just disposable cardboard quality things, right?
No, 60 years old cars are not common, and for several reasons: there were fewer of them initially, because they were more expensive; cars decay faster than houses due to things like accidents and corrosion; cars get more expensive to insure with time and older cars need more fuel, which makes them less economical to run. Again, there is a sweet spot somewhere between 3 and 30 years.
Not sure whether you are deliberately exaggerating, but you don’t really make any good point. They did not say that we should keep using the same things for millennia, just that re-using to some extent is better than re-building.
Not only does this mean that it's more likely overall for a house to simply fall down, it means that the codes attempting to make that less likely are still evolving, as we improve both our understanding of what works well and our building methods and materials.
Attempting to generalize the situation in Japan to the rest of the world is therefore going to be somewhat unhelpful.
As for cars, they are also not particularly comparable, for similar reasons: we've been building houses for literally thousands of years, and while we certainly have more options than we used to, some of which are unquestionably improvements on the old, the fundamentals of what it takes to build a sturdy, safe house haven't changed much. Meanwhile, it's only been just over 100 years since the car was invented, they're much more fundamentally a piece of technology than a house is, and we're currently in a period of rapid improvement in various kinds of safety technologies within them. Again, attempting to compare is unhelpful.
And if you are confident that the house will still stand in 60 years, then an investment in solar+insulation that takes 20 years to pay for itself is quite attractive (and something your local bank will probably give you a loan for).
- At a rough estimate such a building costs 600.000 € - 1.000.000 € nowadays.
- Costs for insulating the exterior walls, the roof and ground floor against the basement is approx. 30.000 - 60.000 €.
- New, insulated windows: approx. 10.000 – 30.000 €.
You'pre good then on energy saving.
And yes, they usually just put plates of foam on the outside. Somehow the mold issue appears to be solved by now as a house-painter told me recently.
I'm not persuaded that the issue of mold simply disappeared. It might be the type of foam they use nowadays, or the way they insulate the houses. For example, I've seen houses insulated from the front and not from the back. At first, I thought it was a cost cutting measure, i.e. "look good, be cheap," but it's actually so common that I don't think that's the answer.
Molds can become toxic in extreme cases, and once they appear, it's amazingly difficult to get rid of them. It's possible that in a town that's highly historic, there are companies that specialize in insulating historical buildings (though I assumed that the vast majority of historical buildings in Germany was destroyed during the wars).
As a side note, I'm not saying it cannot be done. My point was that it was far from "slap some foam around the house". I'd love my building to be insulated.
[1] https://www.scmp.com/magazines/style/news-trends/article/309... [2] https://money.cnn.com/magazines/fortune/fortune_archive/1990...
I am sure there are parts of the Midwest that work the same way, but that's by and large not how the majority of the US works. Your heritage is refreshingly irrelevant, and therefore you can move freely from one place to another. Most people realize that big cities offer better career opportunities, and also that big cities suck for retirement. So you essentially see the following migration pattern:
1. [some place where you were born]
2. [your college town]
3. [career-related move to a bigger city]
(this part can repeat itself many times)
4. [retirement somewhere warm and/or affordable]
So if you're going to move somewhere in the range of 5+ times, why would you invest in a multi-generational home?
Finally, as an aside, interesting to note the correlation between the geographic and economic mobility: the American Dream may or may not be alive anymore, but I've seen so many kids from my college come from nothing and make a fortune (and shockingly, kids from good families end up as failures, mostly due to some sort of conflict with their family). I think the society in the US has accepted that there's a lot of uncertainty when it comes to predicting a kid's future.
That stuff simply doesn't happen in Austria on that scale - if you're poor, you'll stay poor, and vice versa. So a good family name leads to a good standing in the society, and the loop repeats itself (this is where your residence can also serve as a signal for your wealth to reinforce that loop). Why risk leaving all that and moving to a new city where you'd be starting from scratch?
There is nothing inherently wrong with stick built houses using drywall.
I would also argue that old houses are not built better. The materials that you consider "better" where cheaper back when it was built. So it's not like someone back then sat around and said, like some people like to imagine, "I could use cheaper material but I like to do things right. Let's spend twice as much as we need to and future generations will thank us."
Old houses have problems as people have pointed out. Have you seen the windows on a 100 year old house, the insulation, the wiring, plumbing. I think there's also a lot of survivorship bias. You know what kind of house makes it 100 years? One that had a certain construction. What happened to all the crappy houses? They were razed or they fell apart. I also see people looking at what was a mansion, probably owned by some turn of the century robber Barron, and is now just some quirky fixer upper and saying, "They just don't build them like they used to" but that would be like moving into Jeff Bezos's mansion in 100 years and saying, "wow they just don't build them like they used it". They never built them like that. You're just looking at what's left or was worth saving.
this is critical to keep in mind every time somebody is wanking about how old things are better.
you only see the old things that happened to make it. the cast iron pan that happened not to have any voids near the surface, the cheap wooden furniture that happened not to have any sapwood in the pieces used for it. or whatever.
There are some things wrong, just to list a few:
- Stick+drywall building have terrible sound isolation, that drives people away from more efficient high density housing options, everybody wants a fully detached house so the air between the houses may help isolate you from the neighbor's noises. - Stick+drywall needs more diligent maintenance (a simple leak may destroy a house), so again it drives people towards fully detached houses, otherwise your neighbor's bad maintenance may cause troubles for you.
Good walls make good neighbors. I'm convinced that big part of the American aversion to urban living comes from their use of sticks+drywall.
I agree with you that stick built is not desirable for multifamily housing or any housing that shared walls with other families.
I disagree that people dislike shared and more dense housing because of their conceptions about what what noise insulation could be. Shared maintenance would be more of a concern, but shared and dense housing has a ton of other drawbacks (on an individual family level), even though the society wide level benefits are positive.
Who would not want space to park their individual cars and store their skis and beach gear and have a backyard to throw parties in? Not to mention the use of zoning only for detached single family housing on larger plots of land to be able to keep out people who cannot afford as much from the local schools. But that is a separate conversation.
Have you ever lived in apartments? Because It's the reason I bought a house instead of a condo or townhouse. Not everybody has families, in fact single person households are on the rise in the US and this style of living would be ideal for them.
However, I feel like the cost for building concrete shared housing unit must be high enough such that the people willing to pay that much for shared housing units would rather just pay a little more and buy a detached stick house.
But it's not accounted for when building at all. It feels like this thing that gets hand waived away at every step of the process. It's personally why I feel like that style of living is off the table for me.
… and their fires. I don't want my property burned because Aunt Sally went to sleep with a lit cigarette hanging out of her mouth.
But the underlying fact remains that the structure and infrastructure (electrical, plumbing, gas, air ventilation) of a 2021 house are likely going to be much better than those of a home from a previous era.
> e.g., you can realistically restore a stone farmhouse that's gone to ruin more easily than a stick+drywall house that has), no? My sense is that the 500-year TCO is many times higher (maybe as much as an order of magnitude) for US-style homes.
No, labor for masonry related work is insanely expensive, and rightfully so. Even at its most basic, more mass needs more force to move around.
It is so cheap and easy to cut some wood and drywall and install new things and patch it up rather than deal with masonry that will last 500 years.
You could also argue that this type of construction allows more room for generational upgrades than those expected to last 500 years.
Integrating PV solar into the roof might be a more reasonable proposition if you know you're planning to replace the roof in a few years. If you don't expect to have to replace it for several more decades, you're less likely to make that investment.
This also applies to insulation, air sealing, electrical upgrades, etc.
Older houses tend to be much higher quality. You can obviously find custom homes or more expensive homes built with better materials, but according to my contacts in the home building business, ~90% of homes being built right now are the bare minimum required to get the customer to buy, and most of them wouldn't meet regulatory requirements because the inspections just weren't done.
My home was built in the 1970s, at the same time as most of the others in the neighborhood. There was a fire that gutted about half of the home in ~2008, and as a result the entire electrical system, internal plumbing, insulation, and most of the windows were replaced.
Because of this the home was priced like others from the 70s, but I'm very confident that I won't have any major and unexpected structural, electrical, or plumbing issues in the near future.
The only real downsides are that there isn't a basement (I have a dirt crawlspace, with a ~10x10 area dug out enough to stand up for the water heaters and such), and I own one of the few homes inside city limits with a septic tank.
City code prevents me from making major repairs on the septic system, so within the next few years I'll need to connect the home to the sewer. That's going to cost between ~$500 (if I do the work myself, which will probably take about a week of full-time, dirty work) and ~$10k (if I just pay someone to do it all). I'll likely end up hiring someone to dig the trench needed in the front yard and in the crawlspace but do the rest myself.
The UK perspective on old vs. new: newer houses tend to be tiny and feel less comfy even if built to stricter standards. Old houses come with more problems. In Edinburgh "New" Town (late 1700s), it's common to see cabling being run up the outside for things like broadband, because the building is of stone and there's no other sensible way to do it. Retrofitting all the old housing stock is going to be difficult-to-impossible.
Don't forget planning regulations. Gutting a building and effectively building a new one inside incurs far less paperwork (and possible objections!) than demolishing it and building a new one. The UK loves declaring anything and everything to be historic.
In central Europe, usually the center is made out of concrete and then bricks on the outside.
Lumber is easy to produce, easy to transport, easy to form into structures, has excellent tensile strength and flexibility. It is an ideal construction material. There is a reason even the wealthiest in North America still live in stick frame buildings.
My house is over 90 years old and has had two remodels, with a third being done now. It will easily last 100 more barring some disaster.
Cheaper does not always mean better. I’d be fascinated to see what your house does in an 8.0 earthquake, but for your sake not while you’re inside of it.
I would also prefer a house of sticks than no house ;)
For earthquakes, "sticks" and steel are the most durable materials so Americans build with them.
The minimum code built house will not get you that, but it is easily achievable with stick built.
Concrete and steel are still superior of course, and I opt for those in commercial construction. But I have never seen a need for concrete and/or steel in suburban home construction just for noise.
Otherwise you'd be telling me that if I suddenly put a concrete wall between us I should hear you better, not worse, right? /s
What if I put 2 sheets of dry wall with an air core in between us? Are you telling me that would give better sound transmission than a solid concrete wall?
And that the original posters tale of "superior sound insulation" in a house with concrete walls is likely due to factors other than the concrete walls?
My house was built in 1916 and will easily last another 100+ years. Almost all the houses in my neighborhood were built around the same time and are still standing in good condition. Yes it's a wood house and yes wood houses can last a long time.
In most of these places with insane house price to income ratio, it’s the land, not building costs that contribute most of the price.
That being said, what's important about a house is the foundation and the roof. The foundation of mine is as good as any in Europe. The roof, well, asphalt shingles on top of 5/8" plywood on top of roof trusses. Ho hum. But such a roof and attic can be properly maintained, which means keeping it vented even when there are 3 feet of snow on the roof - the modern pagoda style vents go a long way to solving that problem - to avoid ice dam issues, and of course replacing the shingles every 20-30 years.
It is possible to get European style masonry roofs here. Perhaps such a roof over a properly insulated and vented (i.e. cold!) attic would work here. I see them here and there but don't know anyone personally who has one.
I have encountered the occasional North American house owned by traditional Europeans. And they looked just as nice and impeccably maintained as any in Europe. And while maintained this well, will last for centuries. Unmaintained, they certainly deteriorate more quickly.
That's why I think that this is just an excuse for a low quality, cheap work.
Moving up a step is American style 2"x4" framed houses. These are typically built on a concrete foundation, but the structure is formed by inexpensive lumber. This system was designed to go up fast and cheaply, substituting more cheap lumber rather than any sophisticated carpentry [$]. This cheapness offers a home to more people, at the expense of craftsmanship and (probably) longevity. The cheap construction allows people to build enormous homes if they have the means, displaying wealth through sheer size rather than higher quality construction (the resulting homes are mockingly called a "McMansion", a joke pointing out that a big McDonalds hamburger is still... McDonalds quality. A blog making fun of these McMansions can be found here: https://mcmansionhell.com/
However, if you don't want a cheaply constructed home, you don't have to have one! You can find a builder that will build a home to your specifications. This will of course be more expensive, as you aren't tying into the continent sized supply chain for the cheaper construction, but if you prefer quality work, you can certainly make that tradeoff.[-]
In any event, it is usually the land under the home that truly appreciates, not the structure itself. This dynamic broadens the wealth divide between mobile home owners and owners of the second and third type of house. Mobile homes are often placed in "trailer parks", where the owner of the home rents a space to park their trailer, meaning they don't participate in any land value appreciation (and in fact will see their rent go up if the land appreciates).
Still, the focus on cost, and the several levels of price-point allow more people to be housed. The fundamental question is "is it better for a person to have a low quality house, or no house at all?" It seems that Austria has chosen the second, while the US chooses the first.
[&] When I loaded this page searching Montana (a remote, low population, low income state), I see some listings between $20-30 thousand USD. This is incredibly inexpensive, and affordable by basically anyone with a job in the US. https://www.zillow.com/mt/mobile/?searchQueryState=%7B%22pag...
[$] Notice all the focus on cost and speed on this technical manual for the system https://www.civilengineeringx.com/bdac/Stud-Wall-Constructio...
[-] This reference specifies a ~$300,000 USD cost for a timber framed house, quite a bit more than the mobile home variety!
You can't by a tear down in Toronto, Vancouver, Montreal, etc for under a million. Houses rise in value at a rate of about $$1500-2000 a week (for years) while wages have been stagnant for decades. You could have bought a house for 450k-500k in 2005 and sold today for 2 million. I've seen condos that were 175k in 2006 sell for 850k today. You can't even buy a shack out side the city for less than 500k and most are going for over a million or two.
Average price of a house in Toronto will be over 4-5 million in the next decade while the average wage will still be 45-65k.
https://www.realtor.ca/real-estate/23885137/80-49e-avenue-mo...
Anyway, give it another year or two, it will get there.
I thought we all had it really bad. Apparently not.
Ghana prices are completely bonkers. You have to work 100+ years to own property. Despite a expected life span of ~62 years and a population density somewhere in the middle grounds.
Something went utterly wrong I'd say.
It's also a simple measure of income to property price, and not indicative of how long it takes to be pay off a mortgage.
[0]: https://www.supermoney.com/inflation-adjusted-home-prices/
It seems to assume everyone is married, for one. Can someone tell me why such a trivially-calculated and easily-cooked example is useful here? Is there a source for their numbers?
Also, why are they saying “disposable income” when what they mean is _all their income_?
From their info page:
“Note that there is no standard formula to calculate property price indices. Our formulas differs from Case-Shiller Index, UK Housing Price Index, etc.
Price to Income Ratio is the basic measure for apartment purchase affordability (lower is better). It is generally calculated as the ratio of median apartment prices to median familial disposable income, expressed as years of income (although variations are used also elsewhere). Our formula assumes and uses:
- net disposable family income, as defined as 1.5 * the average net salary (50% is assumed percentage of women in the workforce) - median apartment size is 90 square meters price per square meter (the formula uses) is the average price of square meter in the city center and outside of the city center
...”