5 ms·

This is semi off topic, but the sentence "housing in Munich has gone insane" struck me. Housing in my city in Greece has gone crazy too, a two-bedroom apartment

This is semi off topic, but the sentence "housing in Munich has gone insane" struck me. Housing in my city in Greece has gone crazy too, a two-bedroom apartment costs significantly more than minimum wage, and I don't know who can afford to stay there. Does anyone why housing everywhere seems to be going nuts? This can't be a good sign.

sofixa 6y ago
> Does anyone why housing everywhere seems to be going nuts? This can't be a good sign. It will depend on the location, but usually a mix of more people in the big cities, inflation, low interest rates ( so low mortgage rates), physical constraints ( most cities can't sprawl forever), sometimes regulations ( like zoning). It's mostly in big cities though, go to a small one without any obvious geographic advantage ( like being on the seaside), and prices are usually much lower and stagnating. Also depending on location, IMHO the pandemic has shown to a lot of people that remote work is possible and can be productive, so there will be some moves towards smaller cities and villages + remote working for big city businesses.
- StavrosK 6y ago
  That makes sense, thanks. I expected prices in the big city to drop too in the pandemic (at least because of a drop in tourism), but, if anything, they've gone up...
mixmastamyk 6y ago
This is how it happens in California, do many of these happen in Europe? - Populations are growing. - Younger folks would rather live in the city. - Sets of homeowners and voters heavily overlap. - Government supports homeowners via tax policy, all housing is already taken. - Existing homeowners prevent new construction. - Some portion of renters enjoying rent control also support NIMBY policies. A perfect recipe for housing scarcity and therefore high prices.
- StavrosK 6y ago
  If anything, populations here are declining, the set of voters is basically "everyone", or near enough, owning a home isn't particularly supported? Though not discouraged either, there is quite a bit of new construction, but on the outskirts of the city (as happens usually), and there are no rent-control policies. This is why I'm mystified as to what's driving prices up, I've heard things like increasing tourism making owning a home a good investment, foreigners buying homes to get citizenship (a "golden passport"), and foreigners trying to spend their unlaundered fortunes abroad.
  - mixmastamyk 6y ago
    Yes, that’s one I forgot, domestic and foreign money laundering.
dilyevsky 6y ago
Probably many reasons but my understanding is economies globally becoming more mature/competitive -> loans are issued at lower interest bc things are more stable and also businesses require more capital to reach profitability -> near-zero interest increases purchasing power + more money flow into assets bc saving cash is now viewed as bad -> housing, shitcoins andstonks are going up and to the right
jokethrowaway 6y ago
House prices in Europe are generally incredibly overrated (especially if you compare value/rent ratio with property in the USAs), I think it's partially explained by some cultural reasons, by the economic crisis of 2008 (for a long time buying a house has consistently been a great move) and lack of real estate housing (which is half lack of space, half government manipulating the market through various initiatives and regulations). More recently, pent-up demands after a covid induced slow down, temporary government incentives, increased risk of currency devaluation, markets, gold (heck, even cryptocurrencies) at all time highs. Once the economic damage of the pandemic is factored in, small businesses die and the middle class start being taxed even more, I'd expect the market to react negatively as people with money flee. Probably at some point after lockdowns are over (if they will be over at some point) and governments start taxing real estate purchases again (some countries reduced taxation to push the housing market up).
sbarre 6y ago
There has been a growing trend in the last ~10 years for large international REITs (Real Estate Income Trusts - basically corporations purpose-built to own rental housing) to buy up housing in cities where they see an opportunity for arbitrage. These are billion-dollar companies that can buy dozens of buildings at a time. So while before the rental housing busioness was much more decentralized and more locally owned (with exceptions obviously), now we're seeing big organized international corporate operations coming in and buying up stock and optimizing operations to maximize profits to the maximum extent of local laws, and running things arm's length and without any real thought to the fact that these are people's homes, and probably shouldn't be treated with "maximum efficiency". Popular tactics such as "renovictions" are used to get rid of rent-protected legacy tenants, and a (literal) fresh coat of paint is applied to old buildings to then rent at "market rates" which just means the maximum the market can bear.

sofixa 6y ago

> Does anyone why housing everywhere seems to be going nuts? This can't be a good sign. It will depend on the location, but usually a mix of more people in the big cities, inflation, low interest rates ( so low mortgage rates), physical constraints ( most cities can't sprawl forever), sometimes regulations ( like zoning). It's mostly in big cities though, go to a small one without any obvious geographic advantage ( like being on the seaside), and prices are usually much lower and stagnating. Also depending on location, IMHO the pandemic has shown to a lot of people that remote work is possible and can be productive, so there will be some moves towards smaller cities and villages + remote working for big city businesses.

StavrosK 6y ago
That makes sense, thanks. I expected prices in the big city to drop too in the pandemic (at least because of a drop in tourism), but, if anything, they've gone up...

mixmastamyk 6y ago

This is how it happens in California, do many of these happen in Europe? - Populations are growing. - Younger folks would rather live in the city. - Sets of homeowners and voters heavily overlap. - Government supports homeowners via tax policy, all housing is already taken. - Existing homeowners prevent new construction. - Some portion of renters enjoying rent control also support NIMBY policies. A perfect recipe for housing scarcity and therefore high prices.

StavrosK 6y ago
If anything, populations here are declining, the set of voters is basically "everyone", or near enough, owning a home isn't particularly supported? Though not discouraged either, there is quite a bit of new construction, but on the outskirts of the city (as happens usually), and there are no rent-control policies. This is why I'm mystified as to what's driving prices up, I've heard things like increasing tourism making owning a home a good investment, foreigners buying homes to get citizenship (a "golden passport"), and foreigners trying to spend their unlaundered fortunes abroad.
- mixmastamyk 6y ago
  Yes, that’s one I forgot, domestic and foreign money laundering.

dilyevsky 6y ago

Probably many reasons but my understanding is economies globally becoming more mature/competitive -> loans are issued at lower interest bc things are more stable and also businesses require more capital to reach profitability -> near-zero interest increases purchasing power + more money flow into assets bc saving cash is now viewed as bad -> housing, shitcoins andstonks are going up and to the right

jokethrowaway 6y ago

House prices in Europe are generally incredibly overrated (especially if you compare value/rent ratio with property in the USAs), I think it's partially explained by some cultural reasons, by the economic crisis of 2008 (for a long time buying a house has consistently been a great move) and lack of real estate housing (which is half lack of space, half government manipulating the market through various initiatives and regulations). More recently, pent-up demands after a covid induced slow down, temporary government incentives, increased risk of currency devaluation, markets, gold (heck, even cryptocurrencies) at all time highs. Once the economic damage of the pandemic is factored in, small businesses die and the middle class start being taxed even more, I'd expect the market to react negatively as people with money flee. Probably at some point after lockdowns are over (if they will be over at some point) and governments start taxing real estate purchases again (some countries reduced taxation to push the housing market up).

sbarre 6y ago

There has been a growing trend in the last ~10 years for large international REITs (Real Estate Income Trusts - basically corporations purpose-built to own rental housing) to buy up housing in cities where they see an opportunity for arbitrage. These are billion-dollar companies that can buy dozens of buildings at a time. So while before the rental housing busioness was much more decentralized and more locally owned (with exceptions obviously), now we're seeing big organized international corporate operations coming in and buying up stock and optimizing operations to maximize profits to the maximum extent of local laws, and running things arm's length and without any real thought to the fact that these are people's homes, and probably shouldn't be treated with "maximum efficiency". Popular tactics such as "renovictions" are used to get rid of rent-protected legacy tenants, and a (literal) fresh coat of paint is applied to old buildings to then rent at "market rates" which just means the maximum the market can bear.