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High demand for more space due to WfH and a desire for home leisure time due to lack of venues to visit, combined with low interest rates to shore up the market

High demand for more space due to WfH and a desire for home leisure time due to lack of venues to visit, combined with low interest rates to shore up the markets. Is this really a mystery?

yarky 5y ago
It is when too many people can afford it.
xnx 5y ago
Plus years of low construction and now high material costs due to supply chain disruption and more boomers opting to age in place.
- stuaxo 5y ago
  There seems to have been a construction boom in the last 10 years, it's just not sold to people who want to live in them, or people who even live in the country a lot of the time.
  - chrisseaton 5y ago
    People generally don't want new houses here either. They have a reputation for bad quality and soullessness. Obviously there's literally no way to increase stock of 1930s houses, so the shortage is impossible to fix!
    - jelsisi 5y ago
      Soullessness is a big thing for me. I live in the US, and to see new homes being built directly next to major roads and highways, I can't image why people would put up with the noise and smog. Most suburban homes here are made mostly of plastic, with cookie cutter designs.
  - KineticLensman 5y ago
    > it's just not sold to people who want to live in them A vast number of UK retirement villages would like to disagree with you.
  - saddlerustle 5y ago
    Citation needed. In almost every western city I've looked at construction rates a small fraction of what they were in the 70's, and occupancy rates are at an all time high. Construction rates in England: https://research.euro.savills.co.uk/_images/350.jpg https://research.euro.savills.co.uk/_images/350.jpg Occupancy rate in London: https://i.imgur.com/jX1OpmS.png https://i.imgur.com/jX1OpmS.png
simonjgreen 5y ago
If you read beyond the headline you'll see that no, it's not a mystery
- raverbashing 5y ago
  The map also supports that story.
- belter 5y ago
  It is a mystery and a warning of a serious bubble. The bubble will grow to levels never seen in history. Future generations will be saddled with historical high taxation levels. Some Central Bankers will show up at the US Congress or European parliamentary inquiries.They will pull another Greenspan - "I had no clue how the economy really works" type of excuse while getting back to their golden retirements: https://www.theguardian.com/business/2008/oct/24/economics-creditcrunch-federal-reserve-greenspan https://www.theguardian.com/business/2008/oct/24/economics-c... For example at least commenting from an European perspective nothing makes sense: - Real wages (for example in the European Union) are decreasing or stagnant for years - Example data point for 2020 for ex: https://www.statista.com/statistics/264605/development-of-real-wages-in-eu-countries/ https://www.statista.com/statistics/264605/development-of-re... - Most companies are only alive due to governments subsiding jobs, that in reality, do not exist anymore. Ex: KLM and Air France pilots receiving some of the highest salaries in the world, while their airplanes sit on the tarmac.: https://simpleflying.com/air-france-klm-traffic-drop/ https://simpleflying.com/air-france-klm-traffic-drop/ The main issue is that very shortly, the increased debt that most countries were forced to incur will be due soon. Very soon and in, ( what else ? ), increased taxation: https://www.bloomberg.com/graphics/2021-coronavirus-global-debt/ https://www.bloomberg.com/graphics/2021-coronavirus-global-d... All this should mean most persons should thing two times before paying inflated values. Clearly is not not happening. In Europe it is common to see interviews with couples who just got into the so called property ladder. Most are actually ashamed of confirming how much they paid for the microscopic house they just purchased... - Not sure in the US, but in Europe very few young workers are able to get permanent contracts instead of temporary 2-3 years contracts. By law, most countries require those to become permanent contracts after 2-3 renewals but that is not happening. European banks in the last few years, significantly increased the requirements to qualify for a mortgage, requiring both spouses working, permanent work contracts required,minimum apportion of capital sometimes of 10% to 15 % of the value of the house. Just a minority can rely on the "Bank of Papa and Mamma". So this also fails to explain some of the bidding wars seen in the last few months. It is mostly driven by speculators flush with cheap money and central banks complete irresponsibility. It also shows another massive failure on the part of banks to perform their due diligence concerning future prospects. Cue now a US budget that throws away 100 years of economic theory and the world will be in for a very VERY rough ride: https://www.nytimes.com/2021/05/27/business/economy/biden-plan.html https://www.nytimes.com/2021/05/27/business/economy/biden-pl... Initially will be a party worthy of the scenes in the Wolf of Wall Street. The core question here is at which point does THIS matter ? : https://www.visualcapitalist.com/20-trillion-of-u-s-debt-visualized-using-stacks-of-100-bills/ https://www.visualcapitalist.com/20-trillion-of-u-s-debt-vis...
simonh 5y ago
I think there are two effects at play right now that both feed on each other. One of them is mentioned in the article, there aren't many properties actually on the market at the moment so it doesn't take many transactions or many buyers with the resources to drive up prices. The other factor is that some people did very well during the lockdown. Overall yes a lot of people suffered, but if you had a well paid job that you could do from home, and didn't need to pay for a season ticket to go to work, buy lunch, haven't spent on a big holiday, haven't been out to the theatre or restaurants, then you may well have expanded your savings quite significantly. With the low number of houses on the market, there doesn't have to be huge numbers of people in that position for them to move house prices.
croutonwagon 5y ago
Yeah. The pandemic wasn’t the start of that either. The market was nearing peak numbers, akin to 2006-2007 pre crash, before the pandemic shutdowns. Partially because variable rate loans are still a thing. And the FED has kept prime rates at basically 0 since the last crash. And add in a pandemic where there’s now a desire for home office setups….
dasudasu 5y ago
I’d add fear of all the money being injected leading to high asset inflation and permanent higher prices if you don’t enter the market now.
throw0101a 5y ago
Also: demographics. The oldest Millennials are 40, and more and more of that contingent are arriving in their 'family years', especially given the higher average ages of both marriage and pregnancy.

High demand for more space due to WfH and a desire for home leisure time due to lack of venues to visit, combined with low interest rates to shore up the markets. Is this really a mystery?

yarky 5y ago

It is when too many people can afford it.

xnx 5y ago

Plus years of low construction and now high material costs due to supply chain disruption and more boomers opting to age in place.

stuaxo 5y ago
There seems to have been a construction boom in the last 10 years, it's just not sold to people who want to live in them, or people who even live in the country a lot of the time.
- chrisseaton 5y ago
  People generally don't want new houses here either. They have a reputation for bad quality and soullessness. Obviously there's literally no way to increase stock of 1930s houses, so the shortage is impossible to fix!
  - jelsisi 5y ago
    Soullessness is a big thing for me. I live in the US, and to see new homes being built directly next to major roads and highways, I can't image why people would put up with the noise and smog. Most suburban homes here are made mostly of plastic, with cookie cutter designs.
- KineticLensman 5y ago
  > it's just not sold to people who want to live in them A vast number of UK retirement villages would like to disagree with you.
- saddlerustle 5y ago
  Citation needed. In almost every western city I've looked at construction rates a small fraction of what they were in the 70's, and occupancy rates are at an all time high. Construction rates in England: https://research.euro.savills.co.uk/_images/350.jpg https://research.euro.savills.co.uk/_images/350.jpg Occupancy rate in London: https://i.imgur.com/jX1OpmS.png https://i.imgur.com/jX1OpmS.png

simonjgreen 5y ago

If you read beyond the headline you'll see that no, it's not a mystery

raverbashing 5y ago
The map also supports that story.
belter 5y ago
It is a mystery and a warning of a serious bubble. The bubble will grow to levels never seen in history. Future generations will be saddled with historical high taxation levels. Some Central Bankers will show up at the US Congress or European parliamentary inquiries.They will pull another Greenspan - "I had no clue how the economy really works" type of excuse while getting back to their golden retirements: https://www.theguardian.com/business/2008/oct/24/economics-creditcrunch-federal-reserve-greenspan https://www.theguardian.com/business/2008/oct/24/economics-c... For example at least commenting from an European perspective nothing makes sense: - Real wages (for example in the European Union) are decreasing or stagnant for years - Example data point for 2020 for ex: https://www.statista.com/statistics/264605/development-of-real-wages-in-eu-countries/ https://www.statista.com/statistics/264605/development-of-re... - Most companies are only alive due to governments subsiding jobs, that in reality, do not exist anymore. Ex: KLM and Air France pilots receiving some of the highest salaries in the world, while their airplanes sit on the tarmac.: https://simpleflying.com/air-france-klm-traffic-drop/ https://simpleflying.com/air-france-klm-traffic-drop/ The main issue is that very shortly, the increased debt that most countries were forced to incur will be due soon. Very soon and in, ( what else ? ), increased taxation: https://www.bloomberg.com/graphics/2021-coronavirus-global-debt/ https://www.bloomberg.com/graphics/2021-coronavirus-global-d... All this should mean most persons should thing two times before paying inflated values. Clearly is not not happening. In Europe it is common to see interviews with couples who just got into the so called property ladder. Most are actually ashamed of confirming how much they paid for the microscopic house they just purchased... - Not sure in the US, but in Europe very few young workers are able to get permanent contracts instead of temporary 2-3 years contracts. By law, most countries require those to become permanent contracts after 2-3 renewals but that is not happening. European banks in the last few years, significantly increased the requirements to qualify for a mortgage, requiring both spouses working, permanent work contracts required,minimum apportion of capital sometimes of 10% to 15 % of the value of the house. Just a minority can rely on the "Bank of Papa and Mamma". So this also fails to explain some of the bidding wars seen in the last few months. It is mostly driven by speculators flush with cheap money and central banks complete irresponsibility. It also shows another massive failure on the part of banks to perform their due diligence concerning future prospects. Cue now a US budget that throws away 100 years of economic theory and the world will be in for a very VERY rough ride: https://www.nytimes.com/2021/05/27/business/economy/biden-plan.html https://www.nytimes.com/2021/05/27/business/economy/biden-pl... Initially will be a party worthy of the scenes in the Wolf of Wall Street. The core question here is at which point does THIS matter ? : https://www.visualcapitalist.com/20-trillion-of-u-s-debt-visualized-using-stacks-of-100-bills/ https://www.visualcapitalist.com/20-trillion-of-u-s-debt-vis...

simonh 5y ago

I think there are two effects at play right now that both feed on each other. One of them is mentioned in the article, there aren't many properties actually on the market at the moment so it doesn't take many transactions or many buyers with the resources to drive up prices. The other factor is that some people did very well during the lockdown. Overall yes a lot of people suffered, but if you had a well paid job that you could do from home, and didn't need to pay for a season ticket to go to work, buy lunch, haven't spent on a big holiday, haven't been out to the theatre or restaurants, then you may well have expanded your savings quite significantly. With the low number of houses on the market, there doesn't have to be huge numbers of people in that position for them to move house prices.

croutonwagon 5y ago

Yeah. The pandemic wasn’t the start of that either. The market was nearing peak numbers, akin to 2006-2007 pre crash, before the pandemic shutdowns. Partially because variable rate loans are still a thing. And the FED has kept prime rates at basically 0 since the last crash. And add in a pandemic where there’s now a desire for home office setups….

dasudasu 5y ago

I’d add fear of all the money being injected leading to high asset inflation and permanent higher prices if you don’t enter the market now.

throw0101a 5y ago

Also: demographics. The oldest Millennials are 40, and more and more of that contingent are arriving in their 'family years', especially given the higher average ages of both marriage and pregnancy.