9 ms·

Which Cities Have the Highest Risk of a Housing Bubble?

49 points by jman1234 6y ago

dylkil 6y ago
dublin not included and it poses the highest risk of collapse
- derriz 6y ago
  Curious as to the basis of your claim? Dublin property isn't cheap but as a multiple of disposable income, it's in the lower half of European cities[1] - certainly far below Paris or Amsterdam. I'd imagine property which is more affordable is less likely to collapse in price? [1] https://www.statista.com/statistics/722946/house-price-index-in-real-terms-in-eu-28/ https://www.statista.com/statistics/722946/house-price-index... * edit - replaced paywalled FT article with a different source
  - jakub_g 6y ago
    Talking with an Irish colleague, my understanding is that Dublin's so expensive that many Irish people decide to leave the country and work abroad as they can't afford it - Dublin's a hub for multinational companies and only high paid expats working for Google, Apple etc. can afford local prices. I'm wondering how the post-covid full-remote will affect the market there.
    - derriz 6y ago
      Except for an exceptional period between 2012 and 2015, Ireland has had net inflow of migrants for years. Even if you focus purely on Irish people emigrating, the numbers are tiny - about 30k a year from a population of nearly 5 million - mostly from outside Dublin. So there's no trace of many people migrating for economic reasons in the statistics. I will admit that I've more or less given up arguing with my friends who live in Dublin about housing - some sort of mass hysteria has taken hold and normally well-informed people are convinced that Dublin "has the worst property crisis in the world" when all statistics comparing Dublin with other European cities show that buying or renting property there is about average or better in terms of affordability for a European capital.
hourislate 6y ago
My friend likes to say, Toronto housing prices could collapse by 50% and my $400k dollar house in 2005 will still be worth over a million. I don't think there are a lot of folks that realize how much some areas of Toronto have increased over the last 15 years. It is not uncommon to have the a buyer from Asia purchase a house for 200-300k over asking and not even move in, or the buyer is a Chinese UoT Student and buys a 1.8 million dollar house. It is beyond insanity and even a crash won't bring it back to reality.
- mabbo 6y ago
  I bought a (rather large) condo in 2015 for just shy of $600k. In 2017, the same unit in my building on another floor sold for over $900k. 50% increase in value while we did nothing. That's not normal. That's a bubble. That said, the prices haven't gone up in 3 years now- no one is getting $900k for this unit anymore.
- H8crilA 6y ago
  > It is beyond insanity and even a crash won't bring it back to reality. You don't appreciate the power of "crashes" or multi year "slow bleeds". Ultimately housing prices always recovered to their inflation adjusted average, Robert Shiller wrote a lot on this topic. Both from being undervalued and from being overvalued. The only thing that's always unclear is the path. Note that this implies two exists from the situation, or a combination: CPI will go much higher or nominal housing prices will go much lower. 1970s saw the first variant, 1930s and late 2000s saw the second variant. Also, if you want to see true insanity compare Chinese big city apartment prices to salaries and CNY interest rates. That is true insanity. No other country comes even close to what's going on there (maybe 1980s Japan? I suppose it's close). It has a lot to do with chinese people having strong conviction in government's support of the market, kinda like the US equity market is now widely believed to be completely supported by whatever means will necessary. Time will tell how much such self-fulfilling illusions last.
  - nostrademons 6y ago
    The inflation part is pretty key. $M2 has grown from about $7T to $18T, so if anything, housing prices have tracked monetary inflation. It's just that the CPI has severely lagged monetary inflation, possibly because of cheap food prices, cheap oil, cheap microchips, and cheap goods from China. There's a macroeconomic story for that: with roughly 80 million Millenials (in the U.S; ~3B worldwide) reaching homebuying age and competing for a housing stock that's not growing nearly as fast, the ability to buy a house moves up the income ladder, so that sellers can capture money from an increasingly wealthier homebuying population. Meanwhile, those ~3B worldwide Millenials are entering working age, driving the price of labor (and hence of anything built with labor, including food and manufactured goods) down. CPI of goods & non-professional services goes down, price of assets goes up. This demographic trend reverses itself in about 10-15 years as the comparatively tiny Gen-Z reaches homebuying age, but in the meantime there'll be an even bigger pop as late Millenials (1990-1998) reach homebuying age and there are nowhere near enough homes for them all. I'd also expect inflation to start showing up in the CPI as Gen-Z starts to make up the new workforce entrants, boomers start dying off, and hence the labor force shrinks and wages go up.
nostromo 6y ago
The referenced research is much more interesting: https://www.ubs.com/global/en/media/display-page-ndp/en-20200930-ubs-bubble-index-2020.html?campID=CAAS-ActivityStream https://www.ubs.com/global/en/media/display-page-ndp/en-2020...
- aeyes 6y ago
  It mentions New York as only very slightly overvalued. I'm having my doubts about their methods.
  - kilbuz 6y ago
    NYC is NYC. There is an army of wealth who would never suffer the loss of caste incurred by leaving.
jbverschoor 6y ago
Doesn't make sense. Uses price-to-rent, mortgage-to-gdp etc. Mortgage rates are between 0.8 and 1.8% here. Rent is about equal to the interest paid. Also, using the GDP for major cities is wrong.
- valuearb 6y ago
  Eventually those mortgage rates will go back above 4%, and what happens to housing prices when they do ?
  - Emendo 6y ago
    The central bank won't let housing prices go down significantly, so rate will not increase rate back above 4% for a while.
    - jojo2333 6y ago
      oh, is it that easy?
      - jbverschoor 6y ago
        It is that easy. Markets a booming, housing is booming, everything is booming because money of inflation by QE. The cannot stop. At least not with the current currencies.
        valuearb 6y ago
        Ever heard of inflation? How can mortgage rates stay below inflation rates after massive money supply increases?
      - Emendo 6y ago
        Yes, because mortgage rate is essentally set by supply of funds buying mortgage bonds and demand of people getting mortgages. The Central Bank could just buy the mortgage bonds by putting the mortgage on the asset side of the book and issuing currency on the liability side of the book. The Bank of Canada only does this to manipulate the overnight interest rate, on Government of Canada bonds. However, all rules have been thrown out the window these days.
boltzmann_ 6y ago
click looking for SF, disappointed
- deleted 6y ago
  [deleted]
- greensoap 6y ago
  It was listed in the text and full analysis.
  - microtherion 6y ago
    It was interesting to see Zurich classified as more overvalued than San Francisco, but the analysis is not entirely devoid of logic: Zurich has seen fairly active construction, so supply tends to catch up, while San Francisco is a notoriously difficult city to build in.
- dnautics 6y ago
  Deutsche bank is really really in trouble. https://news.ycombinator.com/item?id=21943167 https://news.ycombinator.com/item?id=21943167
najarvg 6y ago
Interesting observation Re. Chicago from infographic - "The only city with an “undervalued” housing market according to the survey was Chicago."
- bpodgursky 6y ago
  Sorta makes me think that UBS is working on pure financials and not factoring in the actual things depressing Chicago house prices: - Political and state-level financial stability risk (the entire state is a stock market hiccup away from bankruptcy) - Catastrophic and increasing murder rate, which is only getting worse (not to mention other less-fatal crime) - Deteriorating public schools driving wealthy families out, or at least to suburbs I don't think Chicago is (yet) lined up to be a new Detroit, but there are real reasons to undervalue Chicago house prices right now...
  - colinmhayes 6y ago
    I grew up in Chicago and left. The areas plagued by gang violence are actually the best in terms of home value to rent ratio for the landlord. Everyone else isn't effected by the violence. Public schools in the city are better than in the suburbs. The real reason that the future isn't bright is mostly the horrible fiscal situation and the god awful weather.
- nradov 6y ago
  Chicago and the rest of Illinois are in a dreadful fiscal situation with underfunded pension liabilities. Anyone who buys real estate there will eventually be hit with higher taxes and lower services. Buyers are probably factoring that in.
  - rhino369 6y ago
    And the high property taxes that will only get higher have a direct impact on home value.
  - im3w1l 6y ago
    Are people really that savvy? Somehow I expect most people are more thinking where they feel like living, and where they can get a good job, then buying a home they can afford there.
ookblah 6y ago
how is seoul not on that list? anecdotally i've seen the median price nearly double in the last 5 years. gov't is trying all kind of tricks to cool it off.
- koheripbal 6y ago
  No one there is moving out of the city due to covid.
- wsc981 6y ago
  I think the study just looked at 25 cities, which means many cities are not included. Bangkok is also having a huge housing bubble, many believe. Same is likely true for Pattaya & Phuket. Too many empty condos. Not enough buyers. Prices could see huge drops in the near future (and are dropping already). Developers are asking the Thai government now to ease regulation around owning of property by foreigners & ease visa regulation for foreigners [0][1][2][3]. --- [0]: https://forum.thaivisa.com/topic/1189104-property-sector-calls-on-government-to-change-visa-regulations-to-stimulate-economy/ https://forum.thaivisa.com/topic/1189104-property-sector-cal... [1]: https://www.thaiexaminer.com/thai-news-foreigners/2020/09/16/condo-industry-bangkok-calls-government-help-chinese-buyers-disappeared/ https://www.thaiexaminer.com/thai-news-foreigners/2020/09/16... [2]: https://www.bangkokpost.com/property/1980939/pattayas-new-condo-supply-sags https://www.bangkokpost.com/property/1980939/pattayas-new-co... [3]: https://www.thaienquirer.com/16236/property-prices-to-fall-due-to-covid-19-impact/ https://www.thaienquirer.com/16236/property-prices-to-fall-d...
tedk-42 6y ago
House prices in capital cities are telling of how much confidence we have in our world and the economy. In Australia, we give out home loans for 30 year periods. Nearly 100 years ago, it was unthinkable to loan out money for that long (2 world wars fit into a 30 year window). House prices are high because interest rates globally are low and the borrowing period is far into the future. I'm unsure what kind of market force is required to change this and I really hope we don't see 40 or 50 year loans.
- quickthrower2 6y ago
  I don't think a 30 year loan is really intended to last 30 years. At some point you will refinance, or overpay to get it paid quicker. The longer loan term gives you flexibility to not be forced to pay as much principle, but anyone taking a 30 year loan should have a plan to increase their income or something (or reduce their lifestyle) and knock some chunks out of that. If you can "handle" it, and most people can't, maybe me included - it is logically better to have the money as an effective LOC in an offset than paid off the loan. That gives you more flexibility. (Unless you want to take out other loans, say for a business, then it might work against you). In theory the best loan would be interest only. Assuming you have the discipline to do something better with that money you were going to pay back - and assuming you get as good a rate (which you wont). So in practice NO but if you have discipline and get a good rate, a loan that you are not forced to pay back (other than interest) is a good thing!
  - tedk-42 6y ago
    My point is that you can borrow more if the payback duration is longer. More borrowing power means buyers can pay more which fuels the fire of the perceived bubble that we're in now.
- jfim 6y ago
  There are already mortgages over a century in Sweden [0], and they changed the legal limit to be a maximum of 105 years for mortgages [1]. [0] https://archive.is/b1xWM https://archive.is/b1xWM [1] https://www.thelocal.se/20160324/sweden-limits-mortgage-loans-to-105-years https://www.thelocal.se/20160324/sweden-limits-mortgage-loan...
Zenst 6y ago
The whole aspect and shift in interest rates over the decades has been a major part in the whole housing market. You had high interest rates, people saved for a lifestyle. The shift to lower interest rates has changed all that and shifted towards a a lifestyle today on credit. That shift alone has had much impact upon society - some good, some bad and I'd learn towards the later in more areas than not, though that whole debate can be subjective. So here we are today, with interest rate buffers mostly eaten up and QE left with no more room due to that, the next thing will be negative interest rates. How that will impact the whole housing market will be interesting. But one other aspect about housing. Culture factors do come into play and some countries tend to rent and others tend to buy. Though would need a chart of countries and the rent/ownership to over time to get a better grasp upon that and not aware of anything that shows that at hand. Though a good insight into that at https://www.rentcafe.com/blog/rental-market/renting-landscape-30-countries-around-world/ https://www.rentcafe.com/blog/rental-market/renting-landscap... Though with the whole motivation to embrace the digital age with work from home, there will imho be a shift from buying into large cities for the commute and a shift into the countrysides. But then, the best data for that would probably be Amazon and a heatmap of deliveries over time - which would be fascinating to see. But signs to look for would be office towers owners in cities applying for planning permission to convert into residential. Which will be needed if the shift is to save some of the many many city based food outlets/resturants/arts etc that need the volume of people that cities offer and without those numbers, will domino. But many area's have been overdue a reality in prices, New york rental market is the next financial timebomb and all due to how finances are worked out, so if you can have high rent, you can value that place more and mortgage/finance accordingly. Indeed it gets to the stage that the legal finances mean that if you set a high rent, you have to charge that rent as no leeway to charge lower due to the financial contracts in-place and how financed. But many housing/building values have been riding the wave of financial hype as much as supply and demand. So COVID if anything, won't cause any issues, just speed them up and that in itself is the issue as a slow shift more palatable over an almost instant overnight shift. Though even with COVID, the human population still grows and grows, so always that aspect for the whole supply and demand factor.
marton78 6y ago
It's weird that Berlin is not on the list. Hardly any city has seen such a price increase in the last decade.
deleted 6y ago
[deleted]
Traster 6y ago
It occurs to me that a bubble is sort of unique, it's not just being high in the distribution. A bubble is where some odd factor causes a massive inflation in an asset that will eventually drop precipitously when there's a correction. What we see with this ratio though is almost the oppsoite. You've just got a fairly reasonable distribution of "bubble risk", it's not like a handful of cities are way out of whack. It's more like there's a sliding scale and naturally some cities are further along it than others. It sort of makes sense that real estate is valued higher in the EU where there are fewer alternative investments that can achieve good returns. Also, I don't really know what the point of having these individual ratings. Surely this is a highly correlated issue? If Frankfurt's prices collapse would you expect Paris to face issues?
t0ughcritic 6y ago
Toronto

49 points by jman1234 6y ago

dylkil 6y ago

dublin not included and it poses the highest risk of collapse

derriz 6y ago
Curious as to the basis of your claim? Dublin property isn't cheap but as a multiple of disposable income, it's in the lower half of European cities[1] - certainly far below Paris or Amsterdam. I'd imagine property which is more affordable is less likely to collapse in price? [1] https://www.statista.com/statistics/722946/house-price-index-in-real-terms-in-eu-28/ https://www.statista.com/statistics/722946/house-price-index... * edit - replaced paywalled FT article with a different source
- jakub_g 6y ago
  Talking with an Irish colleague, my understanding is that Dublin's so expensive that many Irish people decide to leave the country and work abroad as they can't afford it - Dublin's a hub for multinational companies and only high paid expats working for Google, Apple etc. can afford local prices. I'm wondering how the post-covid full-remote will affect the market there.
  - derriz 6y ago
    Except for an exceptional period between 2012 and 2015, Ireland has had net inflow of migrants for years. Even if you focus purely on Irish people emigrating, the numbers are tiny - about 30k a year from a population of nearly 5 million - mostly from outside Dublin. So there's no trace of many people migrating for economic reasons in the statistics. I will admit that I've more or less given up arguing with my friends who live in Dublin about housing - some sort of mass hysteria has taken hold and normally well-informed people are convinced that Dublin "has the worst property crisis in the world" when all statistics comparing Dublin with other European cities show that buying or renting property there is about average or better in terms of affordability for a European capital.

hourislate 6y ago

My friend likes to say, Toronto housing prices could collapse by 50% and my $400k dollar house in 2005 will still be worth over a million. I don't think there are a lot of folks that realize how much some areas of Toronto have increased over the last 15 years. It is not uncommon to have the a buyer from Asia purchase a house for 200-300k over asking and not even move in, or the buyer is a Chinese UoT Student and buys a 1.8 million dollar house. It is beyond insanity and even a crash won't bring it back to reality.

mabbo 6y ago
I bought a (rather large) condo in 2015 for just shy of $600k. In 2017, the same unit in my building on another floor sold for over $900k. 50% increase in value while we did nothing. That's not normal. That's a bubble. That said, the prices haven't gone up in 3 years now- no one is getting $900k for this unit anymore.
H8crilA 6y ago
> It is beyond insanity and even a crash won't bring it back to reality. You don't appreciate the power of "crashes" or multi year "slow bleeds". Ultimately housing prices always recovered to their inflation adjusted average, Robert Shiller wrote a lot on this topic. Both from being undervalued and from being overvalued. The only thing that's always unclear is the path. Note that this implies two exists from the situation, or a combination: CPI will go much higher or nominal housing prices will go much lower. 1970s saw the first variant, 1930s and late 2000s saw the second variant. Also, if you want to see true insanity compare Chinese big city apartment prices to salaries and CNY interest rates. That is true insanity. No other country comes even close to what's going on there (maybe 1980s Japan? I suppose it's close). It has a lot to do with chinese people having strong conviction in government's support of the market, kinda like the US equity market is now widely believed to be completely supported by whatever means will necessary. Time will tell how much such self-fulfilling illusions last.
- nostrademons 6y ago
  The inflation part is pretty key. $M2 has grown from about $7T to $18T, so if anything, housing prices have tracked monetary inflation. It's just that the CPI has severely lagged monetary inflation, possibly because of cheap food prices, cheap oil, cheap microchips, and cheap goods from China. There's a macroeconomic story for that: with roughly 80 million Millenials (in the U.S; ~3B worldwide) reaching homebuying age and competing for a housing stock that's not growing nearly as fast, the ability to buy a house moves up the income ladder, so that sellers can capture money from an increasingly wealthier homebuying population. Meanwhile, those ~3B worldwide Millenials are entering working age, driving the price of labor (and hence of anything built with labor, including food and manufactured goods) down. CPI of goods & non-professional services goes down, price of assets goes up. This demographic trend reverses itself in about 10-15 years as the comparatively tiny Gen-Z reaches homebuying age, but in the meantime there'll be an even bigger pop as late Millenials (1990-1998) reach homebuying age and there are nowhere near enough homes for them all. I'd also expect inflation to start showing up in the CPI as Gen-Z starts to make up the new workforce entrants, boomers start dying off, and hence the labor force shrinks and wages go up.

nostromo 6y ago

The referenced research is much more interesting: https://www.ubs.com/global/en/media/display-page-ndp/en-20200930-ubs-bubble-index-2020.html?campID=CAAS-ActivityStream https://www.ubs.com/global/en/media/display-page-ndp/en-2020...

aeyes 6y ago
It mentions New York as only very slightly overvalued. I'm having my doubts about their methods.
- kilbuz 6y ago
  NYC is NYC. There is an army of wealth who would never suffer the loss of caste incurred by leaving.

jbverschoor 6y ago

Doesn't make sense. Uses price-to-rent, mortgage-to-gdp etc. Mortgage rates are between 0.8 and 1.8% here. Rent is about equal to the interest paid. Also, using the GDP for major cities is wrong.

valuearb 6y ago
Eventually those mortgage rates will go back above 4%, and what happens to housing prices when they do ?
- Emendo 6y ago
  The central bank won't let housing prices go down significantly, so rate will not increase rate back above 4% for a while.
  - jojo2333 6y ago
    oh, is it that easy?
    - jbverschoor 6y ago
      It is that easy. Markets a booming, housing is booming, everything is booming because money of inflation by QE. The cannot stop. At least not with the current currencies.
      - valuearb 6y ago
        Ever heard of inflation? How can mortgage rates stay below inflation rates after massive money supply increases?
    - Emendo 6y ago
      Yes, because mortgage rate is essentally set by supply of funds buying mortgage bonds and demand of people getting mortgages. The Central Bank could just buy the mortgage bonds by putting the mortgage on the asset side of the book and issuing currency on the liability side of the book. The Bank of Canada only does this to manipulate the overnight interest rate, on Government of Canada bonds. However, all rules have been thrown out the window these days.

boltzmann_ 6y ago

click looking for SF, disappointed

deleted 6y ago
[deleted]
greensoap 6y ago
It was listed in the text and full analysis.
- microtherion 6y ago
  It was interesting to see Zurich classified as more overvalued than San Francisco, but the analysis is not entirely devoid of logic: Zurich has seen fairly active construction, so supply tends to catch up, while San Francisco is a notoriously difficult city to build in.
dnautics 6y ago
Deutsche bank is really really in trouble. https://news.ycombinator.com/item?id=21943167 https://news.ycombinator.com/item?id=21943167

najarvg 6y ago

Interesting observation Re. Chicago from infographic - "The only city with an “undervalued” housing market according to the survey was Chicago."

bpodgursky 6y ago
Sorta makes me think that UBS is working on pure financials and not factoring in the actual things depressing Chicago house prices: - Political and state-level financial stability risk (the entire state is a stock market hiccup away from bankruptcy) - Catastrophic and increasing murder rate, which is only getting worse (not to mention other less-fatal crime) - Deteriorating public schools driving wealthy families out, or at least to suburbs I don't think Chicago is (yet) lined up to be a new Detroit, but there are real reasons to undervalue Chicago house prices right now...
- colinmhayes 6y ago
  I grew up in Chicago and left. The areas plagued by gang violence are actually the best in terms of home value to rent ratio for the landlord. Everyone else isn't effected by the violence. Public schools in the city are better than in the suburbs. The real reason that the future isn't bright is mostly the horrible fiscal situation and the god awful weather.
nradov 6y ago
Chicago and the rest of Illinois are in a dreadful fiscal situation with underfunded pension liabilities. Anyone who buys real estate there will eventually be hit with higher taxes and lower services. Buyers are probably factoring that in.
- rhino369 6y ago
  And the high property taxes that will only get higher have a direct impact on home value.
- im3w1l 6y ago
  Are people really that savvy? Somehow I expect most people are more thinking where they feel like living, and where they can get a good job, then buying a home they can afford there.

ookblah 6y ago

how is seoul not on that list? anecdotally i've seen the median price nearly double in the last 5 years. gov't is trying all kind of tricks to cool it off.

koheripbal 6y ago
No one there is moving out of the city due to covid.
wsc981 6y ago
I think the study just looked at 25 cities, which means many cities are not included. Bangkok is also having a huge housing bubble, many believe. Same is likely true for Pattaya & Phuket. Too many empty condos. Not enough buyers. Prices could see huge drops in the near future (and are dropping already). Developers are asking the Thai government now to ease regulation around owning of property by foreigners & ease visa regulation for foreigners [0][1][2][3]. --- [0]: https://forum.thaivisa.com/topic/1189104-property-sector-calls-on-government-to-change-visa-regulations-to-stimulate-economy/ https://forum.thaivisa.com/topic/1189104-property-sector-cal... [1]: https://www.thaiexaminer.com/thai-news-foreigners/2020/09/16/condo-industry-bangkok-calls-government-help-chinese-buyers-disappeared/ https://www.thaiexaminer.com/thai-news-foreigners/2020/09/16... [2]: https://www.bangkokpost.com/property/1980939/pattayas-new-condo-supply-sags https://www.bangkokpost.com/property/1980939/pattayas-new-co... [3]: https://www.thaienquirer.com/16236/property-prices-to-fall-due-to-covid-19-impact/ https://www.thaienquirer.com/16236/property-prices-to-fall-d...

tedk-42 6y ago

House prices in capital cities are telling of how much confidence we have in our world and the economy. In Australia, we give out home loans for 30 year periods. Nearly 100 years ago, it was unthinkable to loan out money for that long (2 world wars fit into a 30 year window). House prices are high because interest rates globally are low and the borrowing period is far into the future. I'm unsure what kind of market force is required to change this and I really hope we don't see 40 or 50 year loans.

quickthrower2 6y ago
I don't think a 30 year loan is really intended to last 30 years. At some point you will refinance, or overpay to get it paid quicker. The longer loan term gives you flexibility to not be forced to pay as much principle, but anyone taking a 30 year loan should have a plan to increase their income or something (or reduce their lifestyle) and knock some chunks out of that. If you can "handle" it, and most people can't, maybe me included - it is logically better to have the money as an effective LOC in an offset than paid off the loan. That gives you more flexibility. (Unless you want to take out other loans, say for a business, then it might work against you). In theory the best loan would be interest only. Assuming you have the discipline to do something better with that money you were going to pay back - and assuming you get as good a rate (which you wont). So in practice NO but if you have discipline and get a good rate, a loan that you are not forced to pay back (other than interest) is a good thing!
- tedk-42 6y ago
  My point is that you can borrow more if the payback duration is longer. More borrowing power means buyers can pay more which fuels the fire of the perceived bubble that we're in now.
jfim 6y ago
There are already mortgages over a century in Sweden [0], and they changed the legal limit to be a maximum of 105 years for mortgages [1]. [0] https://archive.is/b1xWM https://archive.is/b1xWM [1] https://www.thelocal.se/20160324/sweden-limits-mortgage-loans-to-105-years https://www.thelocal.se/20160324/sweden-limits-mortgage-loan...

Zenst 6y ago

The whole aspect and shift in interest rates over the decades has been a major part in the whole housing market. You had high interest rates, people saved for a lifestyle. The shift to lower interest rates has changed all that and shifted towards a a lifestyle today on credit. That shift alone has had much impact upon society - some good, some bad and I'd learn towards the later in more areas than not, though that whole debate can be subjective. So here we are today, with interest rate buffers mostly eaten up and QE left with no more room due to that, the next thing will be negative interest rates. How that will impact the whole housing market will be interesting. But one other aspect about housing. Culture factors do come into play and some countries tend to rent and others tend to buy. Though would need a chart of countries and the rent/ownership to over time to get a better grasp upon that and not aware of anything that shows that at hand. Though a good insight into that at https://www.rentcafe.com/blog/rental-market/renting-landscape-30-countries-around-world/ https://www.rentcafe.com/blog/rental-market/renting-landscap... Though with the whole motivation to embrace the digital age with work from home, there will imho be a shift from buying into large cities for the commute and a shift into the countrysides. But then, the best data for that would probably be Amazon and a heatmap of deliveries over time - which would be fascinating to see. But signs to look for would be office towers owners in cities applying for planning permission to convert into residential. Which will be needed if the shift is to save some of the many many city based food outlets/resturants/arts etc that need the volume of people that cities offer and without those numbers, will domino. But many area's have been overdue a reality in prices, New york rental market is the next financial timebomb and all due to how finances are worked out, so if you can have high rent, you can value that place more and mortgage/finance accordingly. Indeed it gets to the stage that the legal finances mean that if you set a high rent, you have to charge that rent as no leeway to charge lower due to the financial contracts in-place and how financed. But many housing/building values have been riding the wave of financial hype as much as supply and demand. So COVID if anything, won't cause any issues, just speed them up and that in itself is the issue as a slow shift more palatable over an almost instant overnight shift. Though even with COVID, the human population still grows and grows, so always that aspect for the whole supply and demand factor.

marton78 6y ago

It's weird that Berlin is not on the list. Hardly any city has seen such a price increase in the last decade.

deleted 6y ago

[deleted]

Traster 6y ago

It occurs to me that a bubble is sort of unique, it's not just being high in the distribution. A bubble is where some odd factor causes a massive inflation in an asset that will eventually drop precipitously when there's a correction. What we see with this ratio though is almost the oppsoite. You've just got a fairly reasonable distribution of "bubble risk", it's not like a handful of cities are way out of whack. It's more like there's a sliding scale and naturally some cities are further along it than others. It sort of makes sense that real estate is valued higher in the EU where there are fewer alternative investments that can achieve good returns. Also, I don't really know what the point of having these individual ratings. Surely this is a highly correlated issue? If Frankfurt's prices collapse would you expect Paris to face issues?

t0ughcritic 6y ago

Toronto