7 ms·

I can't wait for the housing prices to go down, but there is no sign they will in France. They kept going up, even during the covid crisis.

subpixel 5y ago
The value of real estate may decline but it’s very unlikely to dip into the “affordable for normal folks” territory where demand exists. Rental houses are an asset class now, and that’s unlikely to change while the rich can get richer renting to people who can’t afford to buy.
chrisseaton 5y ago
> even during the covid crisis. Well yeah people wanted more space and had more money to spend - of course prices went up. Not sure why you've said 'even'?
- coldtea 5y ago
  Because tons of professions, small business, workers laid off, etc suffered from the lockdowns, so there was not exactly clear that "people had more money to spend".
  - chrisseaton 5y ago
    The markets absolutely soared. People saved money rather than spent. Most people's jobs carried on as normal or were protected by the government. As a concrete example, bank account deposits in the UK rose 10% during COVID.
    - coldtea 5y ago
      >The markets absolutely soared. The markets are not invididuals, if we're talking about stock markets. And in Europe they don't represent most of the population as asset holders or anything like that. Case in point for France: "There was an 8.3% decrease in France’s economy in 2020, and the country has not seen a recession to this extent since World War II. For example, France’s travel and tourism sector’s contribution to the French economy decreased by 48.8% due to travel restrictions. As a result, that sector alone lost 193,000 jobs. (...) Before the pandemic, 9.3 million people lived below the 1,063-euros-per-month poverty line in France. Those who were poor had little opportunity to improve their lives, especially during the pandemic when unemployment rates reached a two-year high. As a result, retail workers, artisans and self-employed people were among those the pandemic most affected. Further, the number of French people in poverty has significantly increased to more than 1 million people during the pandemic. (...)" >As a concrete example, bank account deposits in the UK rose 10% during COVID. That's one disconnect. Most people don't have bank account deposits (or don't have any to write home about). That's apparently true for the US too... https://www.cnbc.com/2019/01/23/most-americans-dont-have-the-savings-to-cover-a-1000-emergency.html https://www.cnbc.com/2019/01/23/most-americans-dont-have-the... - though I guess those people don't go out buying houses either.
      - chrisseaton 5y ago
        If the class of people who buy houses (people with assets and deposits) get wealthier then house prices go up. As you say, people who aren't buying houses anyway not getting richer doesn't have any impact on the price of houses.
        coldtea 5y ago
        I guess so, but it makes sense to be surprised when house prices (and rent) goes up, in 2 years when most people get fucked over financially.
      - namdnay 5y ago
        Careful, the French measure of “poverty” is a percentage of the median income. It’s more an indicator of inequality than anything else And the 200k people laid off from the tourism and other sectors were paid 80% of their previous income by the state.
        coldtea 5y ago
        >areful, the French measure of “poverty” is a percentage of the median income. It’s more an indicator of inequality than anything else It does say "below the 1,063-euros-per-month poverty line in France" which whether it was calculated with the median income in mind or not, it's quite fine as a poverty measure, not just inequality (that's like making less than $12K/year, or if we adjust for cosr of life, less than $18K/year or so).
        namdnay 5y ago
        Two things: 1) being a fixed percentage of a median, any variation in the median will change the “poverty rate” without it necessarily meaning anything. If the minimum wage increases by 100 euros, the poverty rate will actually increase because the median income will go up and more people will come under X% of it 2) you can’t really compare income across countries. 1000 euros a month means you will receive social housing or subsidies for private rental. It means neither yourself nor your children will pay for any state services (school, school meals, health, swimming pool etc, public transport etc). I’d far far prefer to be on 1k in France than 2k in the US
    - ashtonkem 5y ago
      Yes. That’s clearly what happened. But lots of people, myself included, expected prices to go down. The early pandemic was marked by a market meltdown and a shutdown of the timber and housing industry as analysts expected a drastic slowdown in home buying and building. It was perfectly reasonable at the time to assume (or hope!) that house prices were going to fall, and let's not brow beat people over that.
      - inawarminister 5y ago
        Yeah, similar event happened to the car industry. Analysts and factories forecasted dramatic slowdown in sales, so are rental car companies. Yet after the reduction in investments happened, it turned out consumers in COVID prefer to buy additional cars, or rent to go to smaller towns. Cue pandemonium. (And the supply chain shortages of chips) To be fair, if COVID happened anytime before broadband is available to homes, the analyses wouldn't miss. Novel pandemic, novel technologies, novel situations all around.
  - dazc 5y ago
    In the UK, people who suffered were low wage, casual workers such as hospitality staff- typically not people who were in the house buying market to begin with. Public sector workers and corporate employees tended to fair well because they were 'working from home' and not paying a siginificant part of their income on getting to the office and back. Factor in, also, much less properties available. I was looking for a house at the time and anything that came onto the market was getting snapped up in no time at all. This lack of supply soon translated into increasing asking prices.
  - namdnay 5y ago
    In France? Not really. There was a massive injection of public money. Anyone furloughed was paid 80% to stay at home.
    - coldtea 5y ago
      That's still 20% less than what they were making before. Not exactly something to start them buying houses...
      - namdnay 5y ago
        Except that they’re not driving to work, they’re not eating at the cantine/restaurant at lunchtime, they’re not going on holiday, they’re not going out in the evening…
cinntaile 5y ago
It keeps going up until it doesn't. It would be nice if we could predict when the music stops, but we really can't.
eschulz 5y ago
I've noticed that the covid crisis has resulted in steady or even growing home purchases, many of them as second homes. In the US there was a lot of talk in 2021 of those who had not lost their jobs sitting on more liquidity than ever before, so I'd assume it's many of these people who jumping into the housing market.
- adam_arthur 5y ago
  It was everything. Interest rates fell dramatically, government stimulus/cash transfers were far in excess of any lost wages, fewer people wanted to list houses and do showings due to covid. Certainly a perfect storm.
BossingAround 5y ago
The main question is, what would be the source of the bubble? Is it cheap capital? Fraudulent bank practices? Or is it because people wanted more space during lockdowns while having the sense of financial stability? If the demand increased while supply stayed constant, the price increase is not a bubble. I waited for "the bubble to burst" for years before realizing there likely is no bubble where I am from. Housing's just expensive.
- inglor_cz 5y ago
  My tip is "distrust against the future value of the currency". Bricks do depreciate as well, but not massively. The bond buying programs of the ECB are pretty expensive already, and the Green New Deal will be mostly implemented on credit. And Europe is already quite deep in debt. So is the USA, but the USA can at least derive some strength from the dollar being the world reserve currency, with no clear challenger in view.
- goodpoint 5y ago
  Increasing inequality in the world - driving foreign, speculative, investment e.g. vulture funds
gruez 5y ago
>but there is no sign they will You just described every bubble. The whole point of bubbles is that you can't predict when they'll pop.

subpixel 5y ago

The value of real estate may decline but it’s very unlikely to dip into the “affordable for normal folks” territory where demand exists. Rental houses are an asset class now, and that’s unlikely to change while the rich can get richer renting to people who can’t afford to buy.

chrisseaton 5y ago

> even during the covid crisis. Well yeah people wanted more space and had more money to spend - of course prices went up. Not sure why you've said 'even'?

coldtea 5y ago
Because tons of professions, small business, workers laid off, etc suffered from the lockdowns, so there was not exactly clear that "people had more money to spend".
- chrisseaton 5y ago
  The markets absolutely soared. People saved money rather than spent. Most people's jobs carried on as normal or were protected by the government. As a concrete example, bank account deposits in the UK rose 10% during COVID.
  - coldtea 5y ago
    >The markets absolutely soared. The markets are not invididuals, if we're talking about stock markets. And in Europe they don't represent most of the population as asset holders or anything like that. Case in point for France: "There was an 8.3% decrease in France’s economy in 2020, and the country has not seen a recession to this extent since World War II. For example, France’s travel and tourism sector’s contribution to the French economy decreased by 48.8% due to travel restrictions. As a result, that sector alone lost 193,000 jobs. (...) Before the pandemic, 9.3 million people lived below the 1,063-euros-per-month poverty line in France. Those who were poor had little opportunity to improve their lives, especially during the pandemic when unemployment rates reached a two-year high. As a result, retail workers, artisans and self-employed people were among those the pandemic most affected. Further, the number of French people in poverty has significantly increased to more than 1 million people during the pandemic. (...)" >As a concrete example, bank account deposits in the UK rose 10% during COVID. That's one disconnect. Most people don't have bank account deposits (or don't have any to write home about). That's apparently true for the US too... https://www.cnbc.com/2019/01/23/most-americans-dont-have-the-savings-to-cover-a-1000-emergency.html https://www.cnbc.com/2019/01/23/most-americans-dont-have-the... - though I guess those people don't go out buying houses either.
    - chrisseaton 5y ago
      If the class of people who buy houses (people with assets and deposits) get wealthier then house prices go up. As you say, people who aren't buying houses anyway not getting richer doesn't have any impact on the price of houses.
      - coldtea 5y ago
        I guess so, but it makes sense to be surprised when house prices (and rent) goes up, in 2 years when most people get fucked over financially.
    - namdnay 5y ago
      Careful, the French measure of “poverty” is a percentage of the median income. It’s more an indicator of inequality than anything else And the 200k people laid off from the tourism and other sectors were paid 80% of their previous income by the state.
      - coldtea 5y ago
        >areful, the French measure of “poverty” is a percentage of the median income. It’s more an indicator of inequality than anything else It does say "below the 1,063-euros-per-month poverty line in France" which whether it was calculated with the median income in mind or not, it's quite fine as a poverty measure, not just inequality (that's like making less than $12K/year, or if we adjust for cosr of life, less than $18K/year or so).
        namdnay 5y ago
        Two things: 1) being a fixed percentage of a median, any variation in the median will change the “poverty rate” without it necessarily meaning anything. If the minimum wage increases by 100 euros, the poverty rate will actually increase because the median income will go up and more people will come under X% of it 2) you can’t really compare income across countries. 1000 euros a month means you will receive social housing or subsidies for private rental. It means neither yourself nor your children will pay for any state services (school, school meals, health, swimming pool etc, public transport etc). I’d far far prefer to be on 1k in France than 2k in the US
  - ashtonkem 5y ago
    Yes. That’s clearly what happened. But lots of people, myself included, expected prices to go down. The early pandemic was marked by a market meltdown and a shutdown of the timber and housing industry as analysts expected a drastic slowdown in home buying and building. It was perfectly reasonable at the time to assume (or hope!) that house prices were going to fall, and let's not brow beat people over that.
    - inawarminister 5y ago
      Yeah, similar event happened to the car industry. Analysts and factories forecasted dramatic slowdown in sales, so are rental car companies. Yet after the reduction in investments happened, it turned out consumers in COVID prefer to buy additional cars, or rent to go to smaller towns. Cue pandemonium. (And the supply chain shortages of chips) To be fair, if COVID happened anytime before broadband is available to homes, the analyses wouldn't miss. Novel pandemic, novel technologies, novel situations all around.
- dazc 5y ago
  In the UK, people who suffered were low wage, casual workers such as hospitality staff- typically not people who were in the house buying market to begin with. Public sector workers and corporate employees tended to fair well because they were 'working from home' and not paying a siginificant part of their income on getting to the office and back. Factor in, also, much less properties available. I was looking for a house at the time and anything that came onto the market was getting snapped up in no time at all. This lack of supply soon translated into increasing asking prices.
- namdnay 5y ago
  In France? Not really. There was a massive injection of public money. Anyone furloughed was paid 80% to stay at home.
  - coldtea 5y ago
    That's still 20% less than what they were making before. Not exactly something to start them buying houses...
    - namdnay 5y ago
      Except that they’re not driving to work, they’re not eating at the cantine/restaurant at lunchtime, they’re not going on holiday, they’re not going out in the evening…

cinntaile 5y ago

It keeps going up until it doesn't. It would be nice if we could predict when the music stops, but we really can't.

eschulz 5y ago

I've noticed that the covid crisis has resulted in steady or even growing home purchases, many of them as second homes. In the US there was a lot of talk in 2021 of those who had not lost their jobs sitting on more liquidity than ever before, so I'd assume it's many of these people who jumping into the housing market.

adam_arthur 5y ago
It was everything. Interest rates fell dramatically, government stimulus/cash transfers were far in excess of any lost wages, fewer people wanted to list houses and do showings due to covid. Certainly a perfect storm.

BossingAround 5y ago

The main question is, what would be the source of the bubble? Is it cheap capital? Fraudulent bank practices? Or is it because people wanted more space during lockdowns while having the sense of financial stability? If the demand increased while supply stayed constant, the price increase is not a bubble. I waited for "the bubble to burst" for years before realizing there likely is no bubble where I am from. Housing's just expensive.

inglor_cz 5y ago
My tip is "distrust against the future value of the currency". Bricks do depreciate as well, but not massively. The bond buying programs of the ECB are pretty expensive already, and the Green New Deal will be mostly implemented on credit. And Europe is already quite deep in debt. So is the USA, but the USA can at least derive some strength from the dollar being the world reserve currency, with no clear challenger in view.
goodpoint 5y ago
Increasing inequality in the world - driving foreign, speculative, investment e.g. vulture funds

gruez 5y ago

>but there is no sign they will You just described every bubble. The whole point of bubbles is that you can't predict when they'll pop.