4 ms·

In Ireland we had a property bubble during the "Celtic Tiger" years, and suffered a major correction after 2007 [1]. Apartments in Dublin the capital city lost

by ptha 9y ago

In Ireland we had a property bubble during the "Celtic Tiger" years, and suffered a major correction after 2007 [1]. Apartments in Dublin the capital city lost about 62% of their value. 10years later and prices are climbing steadily upwards [2]. It's deja vu all over again. In Ireland we have a national obsession with owning property. [1] https://en.wikipedia.org/wiki/Irish_property_bubble https://en.wikipedia.org/wiki/Irish_property_bubble [2] https://tradingeconomics.com/ireland/housing-index https://tradingeconomics.com/ireland/housing-index

Supernaut 9y ago
Your use of the term "obsession" implies a degree of irrationality. Many people, myself included, would contend that the desire to own your own home is eminently sensible.
- astura 9y ago
  Jeez, nobody said the desire to own your home was irrational, by definition. You can have a rational desire to own a home or you can have an irrational obsession. Irrational obsession would include things like when you prioritize homeownership over financial security and other basic necessities like healthcare or food. For example I know someone who gave up health insurance to buy house - and she readily admits this.
  - GarvielLoken 9y ago
    You don't have to pay for health insurance in Sweden.
    - astura 9y ago
      Of course, it was merely an example of an unhealthy obsession I've personally seen. There are many more. Another would be neglecting to save anything for retirement because you believe your home is your retirement fund.
    - ptaipale 9y ago
      Or more accurately, you cannot avoid paying for it (as it is collected in employment taxes). The employer has to pay 4,35 % as sjukförsäkringsavgift, as well as other payroll taxes that total 31,42 % of nominal salary (2017). https://sv.wikipedia.org/wiki/Arbetsgivaravgifter_i_Sverige https://sv.wikipedia.org/wiki/Arbetsgivaravgifter_i_Sverige
      - woah 9y ago
        Is that in addition to income tax?
        ptaipale 9y ago
        Yes but that's "paid by the employer" which means that it's on top of nominal salary, but obviously included in the total tax burden. Employer pays $6000 per month, nominal salary is $4565, and employee's income tax 35 % => employee gets $3000.
  - Supernaut 9y ago
    Correct, nobody said that the desire to own your home was axiomatically irrational. I didn't claim that anyone did. What I took issue with was the statement that the Irish populace have an obsessive (i.e. irrational) focus on property ownership. We do prefer to own our own homes, but that preference is not evidence of a national personality disorder.
  - pacala 9y ago
    A broader definition of financial security _includes_ home ownership. The other options are homelessness and renting. The first one is silly, the second is just paying the landlord mortgage while being exposed to financial risk over the long term.
    - JumpCrisscross 9y ago
      > the second is just paying the landlord mortgage while being exposed to financial risk over the long term Homeownership, for most, is a leveraged play on a politically-sensitive asset. Consider two companies. One goes all in—-with borrowed money—-on a deal that does well if the cards fall right but results in default if e.g. property taxes or zoning laws change. The other has higher fixed costs but diversifies its investments. It’s apparent which one is riskier.
    - astura 9y ago
      This has been repeated ad nauseum but if it were correct all businesses would always strive to buy their real estate as soon as they could afford it and since many (including my employer, who brings in a billion dollars a year) are content renting long term, that's obviously not the case. If you buy once you factor in taxes, insurance, upgrades, maintenance, repairs, commission, closing costs, opportunity costs compared to other investments, interest, PMI, etc., assuming you were in a good financial position to buy in the first place so you don't default, you probably will come out ahead compared to renting if you live in your house for more than 5 or so years. But! That's only if the cards fall just right. So if the neighborhood is still desirable, tax policy/political landscape doesn't change, your neighbors keep up with their maintenance, your HoA doesn't go into bankruptcy, a major employer doesn't leave town, tastes in housing doesn't change, the housing market doesn't crash, too many of your neighbors don't foreclose, nearby amenities don't leave, a major highway isn't built through your neighborhood, interest rates haven't soared, political housing incentives/programs haven't gone away, too many black people don't move in(1), etc., etc. You're taking on a very large risk if your buying vs renting, sure it has the ability to work in your favor (extreme example - buying in San Francisco in the 90s) or not in your favor (extreme example - buying in Detroit in the 50s). I've seen people lose out terribly financially buying a house, and not just in 2008 recession, my parents house was bought in 1995 and hasn't even kept up with inflation. That doesn't mean it was the wrong choice for them to buy though, houses are really good at providing shelter. You also have to have the ability and wherewithal to take care of a house - and tons of people don't. I'm a homeowner, I'm not against home ownership. (1) I'm not trying to be racist, but white flight does exist.
lin_lin 9y ago
> It's deja vu all over again. Except for the lack of readily available credit. For the most part, it seems the people paying the high prices are "able" to afford it. The problem is that home ownership (and the security that brings, particularly in Ireland) is not attainable for most young people and families anymore.
- opportune 9y ago
  Could this be a result of Ireland being somewhat of a tax haven? If there's a lot of capital just sitting in Ireland waiting to be repatriated, it might make sense to invest that money within Ireland in the interim. That would increase demand for housing in the short term. The main thing to worry about would be that your housing market could experience a crash whenever that money does get repatriated
  - lin_lin 9y ago
    > Could this be a result of Ireland being somewhat of a tax haven? Not really. The problem is that building all but stopped in the aftermath of the 2007/8 crash. Meanwhile the economy recovered, Dublin in particular is booming now but we're still lacking enough homes to meet demand and building never recovered to the necessary levels. Add in a reluctance for "building up" and a growing population, that gets you higher and higher prices...
  - Supernaut 9y ago
    No, it's nothing to do with Apple's tax arrangements. They're not in the business of buying houses. It's a simple supply and demand issue. There are a lot of young people who want to buy a home, and not enough housing stock to meet their requirements.
    - opportune 9y ago
      Apple isn't the only entity with assets in Ireland
  - T-A 9y ago
    > Could this be a result of Ireland being somewhat of a tax haven? In short, no. It's not as if the EU lacks capital markets. Also: "Is anyone really so naive to imagine that these balances are not already fully available to finance new investments by U.S. companies here? Do they think the global financial system is that unsophisticated? At present interest rate levels, a company needs only to issue debt at favorable rates in the U.S., invest the funds held abroad at floating rates, enter a fixed-floating interest rate swap, and voila, the company has access to the funds exactly as if they had been brought home. Indeed, this is just what many U.S. corporations appear to have done. So cry me some crocodile tears for companies that hold profits abroad." [1] [1] https://www.hussmanfunds.com/wmc/wmc170821.htm https://www.hussmanfunds.com/wmc/wmc170821.htm

by ptha 9y ago

Supernaut 9y ago

Your use of the term "obsession" implies a degree of irrationality. Many people, myself included, would contend that the desire to own your own home is eminently sensible.

astura 9y ago
Jeez, nobody said the desire to own your home was irrational, by definition. You can have a rational desire to own a home or you can have an irrational obsession. Irrational obsession would include things like when you prioritize homeownership over financial security and other basic necessities like healthcare or food. For example I know someone who gave up health insurance to buy house - and she readily admits this.
- GarvielLoken 9y ago
  You don't have to pay for health insurance in Sweden.
  - astura 9y ago
    Of course, it was merely an example of an unhealthy obsession I've personally seen. There are many more. Another would be neglecting to save anything for retirement because you believe your home is your retirement fund.
  - ptaipale 9y ago
    Or more accurately, you cannot avoid paying for it (as it is collected in employment taxes). The employer has to pay 4,35 % as sjukförsäkringsavgift, as well as other payroll taxes that total 31,42 % of nominal salary (2017). https://sv.wikipedia.org/wiki/Arbetsgivaravgifter_i_Sverige https://sv.wikipedia.org/wiki/Arbetsgivaravgifter_i_Sverige
    - woah 9y ago
      Is that in addition to income tax?
      - ptaipale 9y ago
        Yes but that's "paid by the employer" which means that it's on top of nominal salary, but obviously included in the total tax burden. Employer pays $6000 per month, nominal salary is $4565, and employee's income tax 35 % => employee gets $3000.
- Supernaut 9y ago
  Correct, nobody said that the desire to own your home was axiomatically irrational. I didn't claim that anyone did. What I took issue with was the statement that the Irish populace have an obsessive (i.e. irrational) focus on property ownership. We do prefer to own our own homes, but that preference is not evidence of a national personality disorder.
- pacala 9y ago
  A broader definition of financial security _includes_ home ownership. The other options are homelessness and renting. The first one is silly, the second is just paying the landlord mortgage while being exposed to financial risk over the long term.
  - JumpCrisscross 9y ago
    > the second is just paying the landlord mortgage while being exposed to financial risk over the long term Homeownership, for most, is a leveraged play on a politically-sensitive asset. Consider two companies. One goes all in—-with borrowed money—-on a deal that does well if the cards fall right but results in default if e.g. property taxes or zoning laws change. The other has higher fixed costs but diversifies its investments. It’s apparent which one is riskier.
  - astura 9y ago
    This has been repeated ad nauseum but if it were correct all businesses would always strive to buy their real estate as soon as they could afford it and since many (including my employer, who brings in a billion dollars a year) are content renting long term, that's obviously not the case. If you buy once you factor in taxes, insurance, upgrades, maintenance, repairs, commission, closing costs, opportunity costs compared to other investments, interest, PMI, etc., assuming you were in a good financial position to buy in the first place so you don't default, you probably will come out ahead compared to renting if you live in your house for more than 5 or so years. But! That's only if the cards fall just right. So if the neighborhood is still desirable, tax policy/political landscape doesn't change, your neighbors keep up with their maintenance, your HoA doesn't go into bankruptcy, a major employer doesn't leave town, tastes in housing doesn't change, the housing market doesn't crash, too many of your neighbors don't foreclose, nearby amenities don't leave, a major highway isn't built through your neighborhood, interest rates haven't soared, political housing incentives/programs haven't gone away, too many black people don't move in(1), etc., etc. You're taking on a very large risk if your buying vs renting, sure it has the ability to work in your favor (extreme example - buying in San Francisco in the 90s) or not in your favor (extreme example - buying in Detroit in the 50s). I've seen people lose out terribly financially buying a house, and not just in 2008 recession, my parents house was bought in 1995 and hasn't even kept up with inflation. That doesn't mean it was the wrong choice for them to buy though, houses are really good at providing shelter. You also have to have the ability and wherewithal to take care of a house - and tons of people don't. I'm a homeowner, I'm not against home ownership. (1) I'm not trying to be racist, but white flight does exist.

lin_lin 9y ago

> It's deja vu all over again. Except for the lack of readily available credit. For the most part, it seems the people paying the high prices are "able" to afford it. The problem is that home ownership (and the security that brings, particularly in Ireland) is not attainable for most young people and families anymore.

opportune 9y ago
Could this be a result of Ireland being somewhat of a tax haven? If there's a lot of capital just sitting in Ireland waiting to be repatriated, it might make sense to invest that money within Ireland in the interim. That would increase demand for housing in the short term. The main thing to worry about would be that your housing market could experience a crash whenever that money does get repatriated
- lin_lin 9y ago
  > Could this be a result of Ireland being somewhat of a tax haven? Not really. The problem is that building all but stopped in the aftermath of the 2007/8 crash. Meanwhile the economy recovered, Dublin in particular is booming now but we're still lacking enough homes to meet demand and building never recovered to the necessary levels. Add in a reluctance for "building up" and a growing population, that gets you higher and higher prices...
- Supernaut 9y ago
  No, it's nothing to do with Apple's tax arrangements. They're not in the business of buying houses. It's a simple supply and demand issue. There are a lot of young people who want to buy a home, and not enough housing stock to meet their requirements.
  - opportune 9y ago
    Apple isn't the only entity with assets in Ireland
- T-A 9y ago
  > Could this be a result of Ireland being somewhat of a tax haven? In short, no. It's not as if the EU lacks capital markets. Also: "Is anyone really so naive to imagine that these balances are not already fully available to finance new investments by U.S. companies here? Do they think the global financial system is that unsophisticated? At present interest rate levels, a company needs only to issue debt at favorable rates in the U.S., invest the funds held abroad at floating rates, enter a fixed-floating interest rate swap, and voila, the company has access to the funds exactly as if they had been brought home. Indeed, this is just what many U.S. corporations appear to have done. So cry me some crocodile tears for companies that hold profits abroad." [1] [1] https://www.hussmanfunds.com/wmc/wmc170821.htm https://www.hussmanfunds.com/wmc/wmc170821.htm