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Should housing be a primary vehicle for investment and the de facto way of making money? Or should it serve as a necessity and basic aspect of life?
by tolbish 5y ago
Should housing be a primary vehicle for investment and the de facto way of making money? Or should it serve as a necessity and basic aspect of life?
- jaimex2 5y agoShouldn't even need to ask that question but here we are.
- devoutsalsa 5y agoI'll support investors snapping up real estate when they let me live in their billion dollar mansions.
- sunstone 5y agoIn Australia if I recall correctly, foreign buyers are only able to buy newly built homes. Canada would benefit from a similar rule, it would stimulate more housing and not impact the demand for existing homes.
- mths 5y agoI'm not sure Australia should be held as an example of a healthy housing market.
- GrifMD 5y agoDefinitely not Sydney! We just hit a record median of $1,410,133 AUD https://www.domain.com.au/news/sydney-house-prices-reach-record-median-1410133-rising-more-than-1200-in-a-day-in-just-three-months-1075735/ https://www.domain.com.au/news/sydney-house-prices-reach-rec...
- sk0g 5y agoThe apartment I lived in before had a few hundred sold, with most sitting empty. The building managers mentioned most of the owners were Chinese, and would rather not rent it out than drop the rent prices, so they had to constantly carry out inspections on apartments that had never been lived in, for a few years now. Absolutely depressing. The bit that weirded me out most was the post boxes. They were quite big, but about half of them were overflowing, which had to have been the result of a few years of accumulation at least. If the buying price was 40-50% lower, I could save up for a deposit in a year or two, but the crazy house prices here in Australia are not getting any better at all. It also feels morally wrong to be investing at the cost of someone being able to afford a roof over their heads, so maybe renting it is for me. Of course, the city also is going to be hosting the Olympics in a while, so that solidifies my moving away plans!
- sdenton4 5y agoMove into one of the flats with an overflowing box and get it by adverse possession...
- refurb 5y agoBuying a house and leaving it empty is incredibly common in China and other Asian countries. You’ll see entire developments with nobody living there and most of the units unfinished inside. The reason I was told was:1) with crappy equity markets property is a safer investment, 2) not many questions about where the money comes from, 3) very low or non-existent property taxes (costs nothing to hold) and 4) as these countries get wealthier demand for housing only goes up.
- exporectomy 5y agoIsn't the problem in Australia (and New Zealand) mainly caused by first home buyers? They seem to pay the maximum the bank will lend them with no regard for being profitable or a good investment. Just get the best house possible at any cost. Once they own them, they fill them with lower occupancy than investors do, so the supply of housing effectively decreases. I'm one of those people. My house used to be a rental with 5 people in it. Now we have only 3. My neighbor owner has 1 person in a 3 bedroom house.
- spfzero 5y agoThe prices are not being driven up by buyers with 5% down payments. They are being driven up by 100% cash buyers, people moving cash across national boundaries. Just look at the percentage of "all-cash" offers. That tells the whole story.
- renewiltord 5y agoConsidering that foreigners have to buy new build, how do you reconcile that with your view? What evidence would cause you to think it is not foreigners?
- CTDOCodebases 5y agoThe problem is caused by a whole number of factors that incentivise people to buy houses they won’t live in. Housing in Sydney is becoming a self fulfilling prophecy. The more people spend on it the more it’s value increases hence attracting more investors who drive prices up. In order for this to stop the majority of the public will need to find this whole situation unacceptable. I find it absurd that citizens from countries that disallow Australians to buy property can buy residential property here in Sydney. Apparently helping foreign citizens to avoid taxation/capital controls while propping up the construction/banking sector is more important than looking after the average citizens best interests.
- fastball 5y agoIn Indonesia, only citizens or businesses with part ownership by citizens are allowed to own property, and I think this is probably the right way to go for most other countries as well. Unlike the vast majority of other human endeavors, land actually is a zero sum game, at least until we are a space-faring species.
- bookofsand 5y agoEven if we become a space faring species, land will still be a zero sum game. * Within the Solar System the amount of land available on bodies with not-crushing-gravity is limited to a few times the Earth surface. This includes hospitable bodies like Venus, Titan or the Moon. The entire area of Mars is slightly smaller than Earth's land area, with climate conditions significantly worse than Antarctica. Sobering map: https://brilliantmaps.com/solar-system-surface https://brilliantmaps.com/solar-system-surface * Inter-stellar travel is subject to prohibitive time and energy costs. Physically speaking there is no way for Alpha Centaurians to visit their Earth properties on a regular basis, or vice-versa. This renders the whole concept of 'property owned by foreign stellar body inhabitants' moot.
- seanmcdirmid 5y agoLand will stop being a zero sum game if we can ever figure out how to create pocket spaces. But then again, speculation has hit even virtual real estate before, so what do I know?
- Apocryphon 5y agoJust build orbital colonies.
- CTDOCodebases 5y agoIf it wasn’t for this law Bali would be 100% foreign owned.
- em500 5y ago> Unlike the vast majority of other human endeavors, land actually is a zero sum game, at least until we are a space-faring species. Around 17% of the Netherlands is reclaimed from the sea or lakes. The largest project (the Flevopolder [1]) was 240,000 acres, reclaimed in the 1950s and 1960s. Most of the land is still just meadows/grasslands (it has 2 towns with less than 350k inhabitants in total). Meanwhile, in Amsterdam (less than 30min away by car or train) house prices keep increasing by 10%+ YoY. It seems that lack of physical land is not the main limiting factor. [1] https://en.wikipedia.org/wiki/Flevopolder https://en.wikipedia.org/wiki/Flevopolder
- holografix 5y agoI sincerely hope this is incorrect.
- BelenusMordred 5y ago> foreign buyers are only able to buy newly built homes In theory, yes, in reality the largest single residential purchase in the country was $35m and splashed all over the front page of newspapers. It took them 5 years later to realise it was an illegal purchase by a foreigner after he had a different dispute with the tax office. If that sale slips through what hope do you actually have for any others?
- CTDOCodebases 5y agoFor wealthy individuals they can basically buy their residency by operating/investing in an Australian business. After that they apply for a Permanent Residency visa. Once they are a resident they can purchase whatever property they wish just like an Australian Citizen.
- BelenusMordred 5y agoYes but that's tangential, this person outright bought an existing property as a foreigner knowing full well he's not allowed to. Not a single agent, conveyancer or bureaucrat in the entire process ever tried to stop it from happening. The millions of people who looked at it on the front page of paper didn't think twice. You can buy citizenship or residency anywhere and get the perks, but that has nothing to do with the point I was making here. The point is that laws are useless until they are enforced.
- CTDOCodebases 5y agoI agree. I was just adding that even though the laws made to appease the public were created there are still loopholes that invalidate the claim that “only new properties can be sold to foreign citizens.” It’s untrue and even if it was it still ignores the fact that the property market doesn’t distinguish old from new.
- kennywinker 5y agoThat sounds like a recipe for teardowns, which are already a huge problem in vancouver. Incentivizing turning an old lower value house into a new high value house isn’t going to help people.
- MattGaiser 5y agoHow does people investing in housing change how much housing is available? They just rent it out.
- dumbfoundded 5y agoThere will always be a balance of how good a house is an investment and how accessible owning a home is. Investing in housing can decrease housing availability especially if investors are using it for short term rentals.
- runako 5y ago> They just rent it out. This is not the case in some prominent housing markets (London & NYC come to mind). There are owners who purchase the properties as a way to store wealth in the US. These dwellings frequently sit empty most of the time.
- peterburkimsher 5y agoThe Dutch had a great system where buildings that had been empty for over a year could be squatted. https://en.wikipedia.org/wiki/Squatting_in_the_Netherlands https://en.wikipedia.org/wiki/Squatting_in_the_Netherlands I learned about it after a trip to OT301 with some friends from the CouchSurfing meetup in Amsterdam in 2013. Apparently the law has changed though, and now people are being criminally charged for squatting empty buildings.
- renewiltord 5y agoIn California, you can gain possession through adverse possession with about 5 years if lucky. That is, squatters rights exist in theory.
- maccolgan 5y agoWhy yes let's just violate property rights to fix a social problem
- deleted 5y ago[deleted]
- gota 5y agoWhat happened to the punitive taxes for unnocupied homes I read about a couple of years ago? If I recall it was a "tax" 1% of the property value every month after the first 12 of vacancy I can't imagine that going into effect and rent/house prices _not_ going down
- exporectomy 5y agoIf the problem is caused by too many people wanting to live there, rather than empty houses, it wouldn't help. Nobody likes to blame themselves, but everyone living in a high-priced area is partly to blame for the high prices, not just some faceless evil baddies.
- kennywinker 5y agoThere are more empty homes (or occupied just enough to avoid the tax) in vancouver than there are unhoused people here.
- exporectomy 5y agoUnhoused people? Homeless people aren't the market for house buying. It's people who aren't even in Vancouver because they can't afford to live there.
- kennywinker 5y agoBut they are in need of a place to live. One of the consequences of the current housing market in vancouver is that housing is unaffordable even as a renter. Those vacant homes, if they were available for rent would drive down rents for everyone and help house some of those unhoused people.
- exporectomy 5y agoSure, there will be some downward pressure on rents (not necessarily an actual decrease) but that's not an argument that empty homes are a major contributor to the high prices. It might not even be discernable above the noise. The argument of counting homeless people and empty homes is disingenuous because it seems superficially like that's the whole problem when it's surely not.
- peterburkimsher 5y agoI heard a message the other day that there's 3 main vehicles of investment: stocks in companies, bonds in governments, and property (owned mostly by banks and a few rich people). I've been thinking about it ever since, particularly that money usually flows between these 3. The exponential growth required for compound interest to work is only possible in a shortage. Stocks in companies follow a contract-expand business cycle. Governments grow linearly at best. But property has been increasing exponentially due to an increasing population. I fear the day when companies realise that they'll make more money by starting a war, which would devastate governments and property. Many people of a similar age are getting married and buying houses, but I don't know feel that the future is stable enough to make either of those decisions. The kind of house I'd want now as a single guy is different to a house that would be suitable for kids (in the right school zone), or a house for retirement. I think the only safe investment is philanthropy: give it all away, and if I'm still alive, hope that some of those people I help now will be able to support me in my old age after economic, political, and environmental disasters strike.
- kwere 5y agoReal estate Is growing due to heavily regulation and International Capital. Change these parameters and real estate values Will come back to family purchases
- mlac 5y agoGovernments grow in proportion to population (tax base), right? And you can give it away to someone with a promise that they give it back in the future or give you something that they produce, rather than going through philanthropy and hoping things work out. That’s why investments exist. The stock market (after IPOs and issuances) is all speculation and detached from reality of day to day operations (except for buy backs, dividends, the stock is only worth what someone will pay for it - and some companies don’t pay dividends…).
- imtringued 5y ago>The exponential growth required for compound interest to work is only possible in a shortage. Compound interest doesn't need exponential growth. That money is not destroyed when you repay the loan, it's just the profit margin of the banks. If interest rates are above what can be repaid they will have to be lowered until they can be repaid. The 0% lower bound is good enough. It's when people withhold deposits and never use them to pay for anything (you know as dictated by the responsible citizen always earning more than he spends) that you need endless growth because debts must grow fast enough that past debts can be repaid even at 0% interest. >I fear the day when companies realise that they'll make more money by starting a war, which would devastate governments and property. Well, the problem is that it's true. The broken window fallacy isn't about doing something smart it's about doing something smarter than what is being done today.
- tannhaeuser 5y agoInvestment is a basic aspect of life; housing has been traditionally an investment to earn a living when you retire, whether individually or as part of a pension funds. The problem appears to be the monetary policies of central banks and rampant public debt, and the low interest rates, inflation, and lack of alternative investments that go with it.
- yunohn 5y ago> housing has been traditionally an investment to earn a living when you retire, whether individually … Do you mean that people are expected to buy additional houses to make money from, after retirement? I don’t think that’s ever been the case.
- TedDoesntTalk 5y agoI think he means rental income.
- yunohn 5y agoYes, but you can’t rent out the house you live in. So that means you need to buy multiple houses…
- ecshafer 5y agoYou can rent out rooms in the house you live in, but that is less of a thing now than in the past. In the 1800s/1900s widows, spinsters, old women, that had property would often get by by renting out rooms/beds, essentially being a "mother" to young men or women. Men/women came to the city to work, or school, or whatever and they would rent a room and the landlady would serve meals, do laundry, etc.
- yunohn 5y agoDo any of you have some data to back it up or just some anecdotes and stories? The poster claimed this was a tradition and the goal of owning property, so surely there’s some documentation of this being a global phenomenon?
- FooHentai 5y agoProbably a false dichotomy; the ideal is somewhere in the middle. It's reasonable to plan to extract some value back out the commutable, family-size when retiring to somewhere smaller and further out. But it's a problem when this becomes the primary or only available means of funding retirement.
- digislave 5y agoBut isn't that also a factor of what people prepared to pay? Like if some people are prepared to pay 50% or more of their income to live in an attractive location, prices will rise so that to live in that location, most people will have to pay almost all of their income for it? I am not sure there should be regulation to prevent people from doing that, as it represents personal choice and preferences.
- FooHentai 5y agoDefinitely, and also a factor of what people are willing to lend.
- karmasimida 5y agoIn reality, it is both. You don't have to own a house to have housing. Home ownership is, not a basic aspect of human life, sadly for many people. But there is a limit to this idea, and housing is heavily regulated anywhere. Investment banks buying up houses, built for individuals, are just wrong on so many levels.
- digislave 5y agoPeople can only ask for as much money for houses as people are prepared to pay. It isn't true that speculators can simply drive the price up as high as they want. If investing in housing is a good way to make money, it is an incentive to build more housing. Even foreign money could be good. If foreigners pour lots of money into your housing market, you could build lots of cheap houses and sell it to them for lots of money, for example. (not saying you should, just saying foreign investment in housing is not automatically a net loss).
- pkorzeniewski 5y agoI'm disgusted by the whole real estate market, people buying dozens of apartments and houses just to rent them - and hence increasing prices for people who just want something on their own instead of making rich people richer - is destructive for society, especially for young people. Owning a roof over your head shouldn't require an average person to work their ass for half of their lives.
- syshum 5y agoHistorically the price of the Average Home should be about 2x average household annual income. We are way off that good median today, so either prices have to fall or incomes have to go up. However the causes of this can not be simply explained away by "people buying dozens of apartments and houses just to rent them" the reality is far more complicated than that. even if you put a ban or cap on the number of rentals a person / company could have it would not solve the housing issue, and likely make it worse.
- voisin 5y ago> Historically the price of the Average Home should be about 2x average household annual income. Source? I have heard many boomers talk about how the advice was to pay no more than 4x income. Obviously highly unlikely in this day and age.
- syshum 5y agoI don't know the original source, but it fairly common financial advice. Here is one source [1] but a simple DuckDuckGo search or Google Search will show many others. Some are starting to recommended 3-4x due to low interest which as I said in other comments I do not agree with. [1] https://www.investopedia.com/articles/pf/05/030905.asp https://www.investopedia.com/articles/pf/05/030905.asp
- nemo44x 5y agoInterest rates have steadily fallen for about 40 years. So the 2x income idea is badly outdated as it assume interest rates around 15%. When you consider inflation and interest rate decreases, owning a home today is essentially the same as it was 40 years ago in most markets. There are some outliers but overall the inflation adjusted monthly payment isn’t that different. It’s just that a bigger part of that payment is going to principal rather than interest. The biggest issue is the outdated idea of putting 20% down. As interest rates fall, down payment percentages should fall. And although you can put less down you end up paying PMI which should be adjusted down too.
- telxos 5y agoIn America, we have just made it too difficult to build new houses. We have short circuited the market equilibrium. The real way to make money here would be in building new houses. It is somewhat odd to me how this point never comes up. At least where I am, there is absolutely no shortage of land that could have new houses built but there is so much red tape it is not a good investment. This is especially true when we juice the stock market constantly to create a much better alternate investment. Of course, any real problem in the world is multivariate but we like to dimensionality reduce everything to a single variable. Hedge funds buying single family homes is bullshit. Not building enough new homes while giving everyone money borrowed from the future and rules to promote home buying has obvious consequences on price and supply though.
- grecy 5y agoIt is not possible for housing to simultaneously be affordable and a good investment. Given it's a basic human right, I feel we shouldn't allow housing to be an investment.
- MichaelZuo 5y agoAs a Canadian I haven’t heard the government declare housing a basic human right, do you have a source?
- tengbretson 5y agoWho are you willing to have thrown in jail in defense of that right?
- hnarn 5y agoTo be quite frank, if there's one thing in the world that has the potential of making me a communist, it's the current state of the global real estate market.
- closeparen 5y agoThis is a cheap sentiment to express. You want righteousness points, specify the system by which you will choose who gets which housing. See if that stands up to scrutiny.
- tolbish 5y agoFound the landlord. Also, you have made quite a few assumptions there, friend. There are several good ideas listed here, including raising taxes on unoccupied homes.