7 ms·

The Economist house-price indices

72 points by IshV 9y ago

jimrandomh 9y ago
This says the price of mousing in SF has only increased by 78% since 2000. I spot-checked that, and the first alternate source of data I could find, https://www.paragon-re.com/trend/san-francisco-home-prices-market-trends-news https://www.paragon-re.com/trend/san-francisco-home-prices-m... , says the increase has been much larger.
- caseysoftware 9y ago
  It looks like the Paragon data is nominal dollars but the Economist adjusted to account for inflation. If you flip the Economist chart to nominal dollars, it's a +158% difference, so that's a good chunk of the difference but not all.
- nohat00 9y ago
  It is unclear which definition of "San Francisco" they are using. Is it just the city of San Francisco, the San Francisco-Oakland-Hayward, CA Metropolitan Statistical Area, or the San Jose–San Francisco–Oakland, CA Combined Statistical Area? I would guess that since San Jose is not listed separately, they are using the CSA, which includes a lot of outlying areas.
cwal37 9y ago
Chicago is so ridiculously cheap compared to the rest of the very small group of "large american cities with big functional public transit networks." Never thought I'd really consider moving back home, but that's definitely something I didn't appreciate growing up. Given the lack of geographic constraints, it's amazing how expensive the DC area is. In % terms since 2000 it looks like only SF has exceeded it out of the big cities. NYC had a lower increase, and Seattle is only just now getting to a similar level. I hate looking for housing here.
- solipsism 9y ago
  Same, I didn't appreciate Chicago when I lived there. The El is pretty great in retrospect. The idea of not having a car in Seattle seems ludicrous.
- nugget 9y ago
  Part of what's keeping Chicago home prices low may be a relatively high property tax that's predicted to increase in the near future, in order to stabilize underfunded pensions. There was an interesting discussion on HN about a year ago about the Greek debt crisis and how the Greek State had effectively increased property taxes to 6%+, to the point where prices cratered and the re-sale market in some areas froze up. I think the catalyst for the discussion was an article about heirs refusing to inherit certain properties because the hassle to sell, and upkeep costs in the meantime, just wasn't worth it. It made me appreciate that if things get bad enough, governments have a legal and fairly accessible mechanism for confiscating a large portion of the property wealth held by their citizens.
  - api 9y ago
    I do not expect the pension to last. It seems like a failed socioeconomic experiment. Corruption and mismanagement play a role for sure but the big killer is increasing life spans coupled with declining fertility. With 1.5-2 kids per couple and an extra 20 years of retirement the math does not work. The only thing that could save it is crazy economic growth but that is unlikely.
    - onlyrealcuzzo 9y ago
      Exactly. It might not sound like a big deal if life expectancy increases from 70-75. That's only a 7% increase! But, when the retirement age is 65, you're retired for TWICE as long. That's a huge difference. Either pension contributions need to increase AT LEAST two-fold, benefits cut in half, or retirement age is always set at life-expectancy - 5 years. Not to mention, somehow now 62 is the new 65. Making the problem almost 3-times as bad.
gervase 9y ago
Are there any well-known theories that explain these disparities? I was quite surprised by the nearly-flat cost of housing in Germany (relative to inflation), for example. Is this a product of legislative, economic, or cultural differences?
- CalRobert 9y ago
  Germany has had a bit of a problem with a low birth rate. There's also a cultural dislike of debt I believe. I eye properties on immowelt with envy pretty often.
- detaro 9y ago
  What does this house price number here capture? Cost of a single-family home? Buying cost of residential buildings in general? Or some combined index of actual housing cost? some speculations: A large part of the German market is renting, even more so in the "hot" cities. Many smaller towns and rural areas are struggling, so there are likely quite a few cheap houses available there which keep an average down, even if home prices in boom areas increase. Buying a house is one of the few widely "acceptable" reasons to go in debt, but many Germans still try to avoid or at least minimize it.
  - CalRobert 9y ago
    Weirdly enough I've been looking at homes in ruralish areas and contemplating buying one to live in and work remote for a few years. Might be able to do it cash, even in an old walled city, and it seems like it wouldn't be the worst way to learn German for myself and my infant. Any comment?
- branchless 9y ago
  German banks lend against productive endeavor, shunning the Anglophone rentier behaviour: https://www.youtube.com/watch?v=qpq2eqz6mR0 https://www.youtube.com/watch?v=qpq2eqz6mR0 They also make land available to build on, unlike former UK colonies which all use a combination of zoning to suppress supply and loose credit to increase bidding levels. All former UK colonies have land bubbles.
acd 9y ago
Also see the Herengracht index long term housing index which tracks housing prices on the central canals of Amsterdam. https://hotelivory.files.wordpress.com/2010/08/herengracht21.jpg https://hotelivory.files.wordpress.com/2010/08/herengracht21... http://www.personal.psu.edu/bwa10/House%20Prices%20and%20Fundamentals%20On-line%20Appendices.pdf http://www.personal.psu.edu/bwa10/House%20Prices%20and%20Fun...
WouterZ 9y ago
Netherlands, housing market so screwed up that it'll cause braindrain...
- onlyrealcuzzo 9y ago
  What's wrong with Netherlands? From my understanding, it's one of the most affordable European countries for housing.
- dredmorbius 9y ago
  Any details on that?
curiousgal 9y ago
Tangent: Are there any good resources for learning D3.js. Most of the things I found online were basic.
binarymax 9y ago
The cost of the actual home is only one third of the story. The other two thirds being interest rate and property tax. I'd love to see an analysis with those other variables.
- onlyrealcuzzo 9y ago
  I've forever wanted to see this, and I'm not sure if I just suck at searching, or if no one does this. It doesn't seem like it should be /too/ hard. I mean, property taxes are going to be different in different regions of each country, but getting a rough average shouldn't be too hard. And it's not too hard to get interest rates for countries for the past 20-ish years.
  - davidgay 9y ago
    The problem is that you don't have to just find two numbers (interest rate, tax rate) for each location and year. You have to account for: - different approaches to mortgages (fixed term vs not, different typical terms, etc) - extremely different tax regimes (e.g., Switzerland has no property tax, does have a wealth tax, and adds to your income an estimated rental cost for the property) And now once you've gathered all of that data, you get to figure out how to make it all comparable :)
    - onlyrealcuzzo 9y ago
      Great point -- but by taxes, I meant to include all that stuff. I guess that could get really tricky over time, since Switzerland--I'm guessing--introduced these laws within the last 30 years. But given that the economist article only covers like 30 countries, it doesn't seem like it's that much work. Maybe I'll take a stab at it. Comparing them is a good point as well. The economist article doesn't go far enough in my opinion. I'm interested mostly in mortgage payment vs rent. And mortgage payment vs income (after taxes). Even income after taxes is a little tricky. Not sure if they're are any countries with REALLY high sales tax, but things like that could be worth considering.
- conanbatt 9y ago
aphextron 9y ago
I have a theory that real estate remains the only undervalued asset class left in the US. All of the attention has been in the stock market over this economic cycle, and people are likely still scarred from '07. Sure the housing market has gotten insane in the Bay Area and a few other large metros. But outside of that there are crazy deals to be had right now.
- kolbe 9y ago
  Can you give us some examples of these 'crazy deals' and articulate fully why they are in fact 'crazy deals'?
- Eridrus 9y ago
  There are a lot of fixed costs that add significant friction to the housing market.
ggm 9y ago
Fantastic. I'm sharing this far and wide. I knew my economy was nuts, this proves what a unique blend of nutty economies I'm part of. AU outranked by NZ for outrageous house price inflation! who knew? Ireland is looking good right now. All that GFC lunacy paid off in a huge housing stock I guess.

72 points by IshV 9y ago

This says the price of mousing in SF has only increased by 78% since 2000. I spot-checked that, and the first alternate source of data I could find, https://www.paragon-re.com/trend/san-francisco-home-prices-market-trends-news https://www.paragon-re.com/trend/san-francisco-home-prices-m... , says the increase has been much larger.

caseysoftware 9y ago
It looks like the Paragon data is nominal dollars but the Economist adjusted to account for inflation. If you flip the Economist chart to nominal dollars, it's a +158% difference, so that's a good chunk of the difference but not all.
nohat00 9y ago
It is unclear which definition of "San Francisco" they are using. Is it just the city of San Francisco, the San Francisco-Oakland-Hayward, CA Metropolitan Statistical Area, or the San Jose–San Francisco–Oakland, CA Combined Statistical Area? I would guess that since San Jose is not listed separately, they are using the CSA, which includes a lot of outlying areas.

cwal37 9y ago

Chicago is so ridiculously cheap compared to the rest of the very small group of "large american cities with big functional public transit networks." Never thought I'd really consider moving back home, but that's definitely something I didn't appreciate growing up. Given the lack of geographic constraints, it's amazing how expensive the DC area is. In % terms since 2000 it looks like only SF has exceeded it out of the big cities. NYC had a lower increase, and Seattle is only just now getting to a similar level. I hate looking for housing here.

solipsism 9y ago
Same, I didn't appreciate Chicago when I lived there. The El is pretty great in retrospect. The idea of not having a car in Seattle seems ludicrous.
nugget 9y ago
Part of what's keeping Chicago home prices low may be a relatively high property tax that's predicted to increase in the near future, in order to stabilize underfunded pensions. There was an interesting discussion on HN about a year ago about the Greek debt crisis and how the Greek State had effectively increased property taxes to 6%+, to the point where prices cratered and the re-sale market in some areas froze up. I think the catalyst for the discussion was an article about heirs refusing to inherit certain properties because the hassle to sell, and upkeep costs in the meantime, just wasn't worth it. It made me appreciate that if things get bad enough, governments have a legal and fairly accessible mechanism for confiscating a large portion of the property wealth held by their citizens.
- api 9y ago
  I do not expect the pension to last. It seems like a failed socioeconomic experiment. Corruption and mismanagement play a role for sure but the big killer is increasing life spans coupled with declining fertility. With 1.5-2 kids per couple and an extra 20 years of retirement the math does not work. The only thing that could save it is crazy economic growth but that is unlikely.
  - onlyrealcuzzo 9y ago
    Exactly. It might not sound like a big deal if life expectancy increases from 70-75. That's only a 7% increase! But, when the retirement age is 65, you're retired for TWICE as long. That's a huge difference. Either pension contributions need to increase AT LEAST two-fold, benefits cut in half, or retirement age is always set at life-expectancy - 5 years. Not to mention, somehow now 62 is the new 65. Making the problem almost 3-times as bad.

gervase 9y ago

Are there any well-known theories that explain these disparities? I was quite surprised by the nearly-flat cost of housing in Germany (relative to inflation), for example. Is this a product of legislative, economic, or cultural differences?

CalRobert 9y ago
Germany has had a bit of a problem with a low birth rate. There's also a cultural dislike of debt I believe. I eye properties on immowelt with envy pretty often.
detaro 9y ago
What does this house price number here capture? Cost of a single-family home? Buying cost of residential buildings in general? Or some combined index of actual housing cost? some speculations: A large part of the German market is renting, even more so in the "hot" cities. Many smaller towns and rural areas are struggling, so there are likely quite a few cheap houses available there which keep an average down, even if home prices in boom areas increase. Buying a house is one of the few widely "acceptable" reasons to go in debt, but many Germans still try to avoid or at least minimize it.
- CalRobert 9y ago
  Weirdly enough I've been looking at homes in ruralish areas and contemplating buying one to live in and work remote for a few years. Might be able to do it cash, even in an old walled city, and it seems like it wouldn't be the worst way to learn German for myself and my infant. Any comment?
branchless 9y ago
German banks lend against productive endeavor, shunning the Anglophone rentier behaviour: https://www.youtube.com/watch?v=qpq2eqz6mR0 https://www.youtube.com/watch?v=qpq2eqz6mR0 They also make land available to build on, unlike former UK colonies which all use a combination of zoning to suppress supply and loose credit to increase bidding levels. All former UK colonies have land bubbles.

acd 9y ago

Also see the Herengracht index long term housing index which tracks housing prices on the central canals of Amsterdam. https://hotelivory.files.wordpress.com/2010/08/herengracht21.jpg https://hotelivory.files.wordpress.com/2010/08/herengracht21... http://www.personal.psu.edu/bwa10/House%20Prices%20and%20Fundamentals%20On-line%20Appendices.pdf http://www.personal.psu.edu/bwa10/House%20Prices%20and%20Fun...

WouterZ 9y ago

Netherlands, housing market so screwed up that it'll cause braindrain...

onlyrealcuzzo 9y ago
What's wrong with Netherlands? From my understanding, it's one of the most affordable European countries for housing.
dredmorbius 9y ago
Any details on that?

curiousgal 9y ago

Tangent: Are there any good resources for learning D3.js. Most of the things I found online were basic.

binarymax 9y ago

The cost of the actual home is only one third of the story. The other two thirds being interest rate and property tax. I'd love to see an analysis with those other variables.

onlyrealcuzzo 9y ago
I've forever wanted to see this, and I'm not sure if I just suck at searching, or if no one does this. It doesn't seem like it should be /too/ hard. I mean, property taxes are going to be different in different regions of each country, but getting a rough average shouldn't be too hard. And it's not too hard to get interest rates for countries for the past 20-ish years.
- davidgay 9y ago
  The problem is that you don't have to just find two numbers (interest rate, tax rate) for each location and year. You have to account for: - different approaches to mortgages (fixed term vs not, different typical terms, etc) - extremely different tax regimes (e.g., Switzerland has no property tax, does have a wealth tax, and adds to your income an estimated rental cost for the property) And now once you've gathered all of that data, you get to figure out how to make it all comparable :)
  - onlyrealcuzzo 9y ago
    Great point -- but by taxes, I meant to include all that stuff. I guess that could get really tricky over time, since Switzerland--I'm guessing--introduced these laws within the last 30 years. But given that the economist article only covers like 30 countries, it doesn't seem like it's that much work. Maybe I'll take a stab at it. Comparing them is a good point as well. The economist article doesn't go far enough in my opinion. I'm interested mostly in mortgage payment vs rent. And mortgage payment vs income (after taxes). Even income after taxes is a little tricky. Not sure if they're are any countries with REALLY high sales tax, but things like that could be worth considering.
conanbatt 9y ago

aphextron 9y ago

I have a theory that real estate remains the only undervalued asset class left in the US. All of the attention has been in the stock market over this economic cycle, and people are likely still scarred from '07. Sure the housing market has gotten insane in the Bay Area and a few other large metros. But outside of that there are crazy deals to be had right now.

kolbe 9y ago
Can you give us some examples of these 'crazy deals' and articulate fully why they are in fact 'crazy deals'?
Eridrus 9y ago
There are a lot of fixed costs that add significant friction to the housing market.

ggm 9y ago

Fantastic. I'm sharing this far and wide. I knew my economy was nuts, this proves what a unique blend of nutty economies I'm part of. AU outranked by NZ for outrageous house price inflation! who knew? Ireland is looking good right now. All that GFC lunacy paid off in a huge housing stock I guess.