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In many west coast locations, house prices are far beyond the prior housing bubble peaks, I often come across places that are 75% to 100% more than they were du
by notadoc 9y ago
In many west coast locations, house prices are far beyond the prior housing bubble peaks, I often come across places that are 75% to 100% more than they were during the mid-2000s bubble.
Pick any popular western location, city, or neighborhood, and you'll find prices 300% and 500% higher than they were in 2000 and often double or more what they were in the first housing boom. And no, incomes have not increased that much. Many of these areas have price-to-income ratios into the absurd of 10x-15x. Outside of San Francisco, does anyone really think that is sustainable?
- treehau5 9y agoIn the former case, the inflation was due to sketchy MBS's. In the latter case, price inflation in major city center's suburbs are causing the cost of building materials to go sky (lumber I believe is up 16% in the past 6 months), thus making a house that was once 100$ a square foot to build now 135$ a square foot.
- Kenji 9y agoThat's what happens when your government dumps money into banks, which dump it into mortgages, to increase spending in a struggling market. It's like drinking alcohol to ease the suffering caused by a mental health problem. You just make everything worse.
- lotsofpulp 9y agoNot a problem for those who already have assets and can ride the wave. Well, I guess not a problem as long as they have the cash flow to keep it going, or at least 1 non-leveraged home.
- mrec 9y agoMark Blyth is fond of observing that "The Hamptons are not a defensible position". Here in the UK we're finally seeing signs that the political worm is starting to turn. Partly a realization, growing for a while, that permanently excluding everyone who doesn't already own a home from any kind of financial security is maaaybe not the most far-sighted electoral strategy. Partly the shock of the recent General Election where the young actually voted for once. (I don't think they voted for anything helpful, in this context, but the mere act of voting means that their problems are suddenly being taken seriously in a way they weren't before.)
- mistermann 9y agoHow many new multimillionaires does China produce each year?
- api 9y agoI'd love to see some real data on just how much Chinese and other flight capital being dumped into RE is contributing to these price increases.
- charlesdm 9y agoProbably a lot more than you think.
- deleted 9y ago[deleted]
- resolaibohp 9y agoI would love to see some real data on this. I hear the blame for high real estate prices go to Chinese foreigners very frequently, yet I have never seen any real facts. This is what I see happening with real estate right now. I feel like the majority of people who are driving up the prices are the people who were lucky to buy property at the right time and right place in the past and are cashing in now and trading up to a much nicer property in a different less expensive city or even in the same city they live in. It can make sense to stay in the same city and trade up, the economy is better now, they most likely have higher paying jobs and their profits from their old property effectively reduces the cost of new properties to house prices many years ago assuming they use their profit as a down payment. It is the people who were not homeowners before who are suffering in this market. This is why house values have no attachment to wages. Wages are not what are determining prices. It is the profits from previously purchased property which is fueling this market.
- mistermann 9y agoWhen more income comes from RE appreciation (tax free, on top of it) than earned income, wages also have very little to do with standard of living.