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>Those price increases incentivize builders to increase the housing stock (which subsequently lowers prices). This is not reality though. Here in the UK our ho

by Baloo 4y ago

>Those price increases incentivize builders to increase the housing stock (which subsequently lowers prices). This is not reality though. Here in the UK our housing is in major crisis because people simply cannot afford the insane price increases. Pretty much everyone I know shares their living situation, on their own they would not be able to afford basic amenities. The guardian today published an article showing: >Average monthly rental payments were now 40% higher than they were 10 years ago, while typical mortgage payments for the same properties were up 13%. Landlords and property owners are hiking the prices way beyond reasonable value, in some parts of the country rent is up by over 20% in the last year alone. By your logic there should be an incentive for builders to increase the housing stock, but private enterprise aren't building anymore homes now than they were 10, 20, 30, 40, 50 years ago. We do however have a situation where the average mortgage is about £900 per month, whereas the average rent has skyrocketed to £1600 per month (£1100 outside of London, £2200 in London). Available rental stock is down 25%, with demand up 5%. It's great for property speculators, buy-to-let landlords and property developers, people are offering above asking prices simply to secure a home. >My landlord takes all the risk of owning the property (prices don’t always go up after all). Sure there is risk, but when you charge 30% more than you repay for the mortgage, while at the same time property prices rise 75% in 10 years, it's safe to say that the cash cow is being thoroughly milked for every last drop and as a result many people are suffering. Ultimately there shouldn't be 'risk', this mindset is a big problem. Homes are a fundamental, basic human need. Using them as an investment method, business model or means to hedge against inflation, is causing rampant speculation and quite honestly extorting people that have no other choice, exploiting vulnerable families that need a home. It should be an extremely tightly controlled market, with sufficient funding to ensure that quality & affordable housing is available for everyone.

wahnfrieden 4y ago
- feet 4y ago
  Yea, and they're disagreeing. What are you trying to say?
  - wahnfrieden 4y ago
nickles 4y ago
> Here in the UK our housing is in major crisis because people simply cannot afford the insane price increases. Pretty much everyone I know shares their living situation, on their own they would not be able to afford basic amenities. The housing in UK is in crisis because there have not been enough homes built. My rent has gone up too, but it's not because my landlord is greedy. The cost of maintaining the building has gone up thanks to inflation (plumbers/electricians/superintendent/etc.) all have to be paid higher wages. Replacing broken fixtures is more expensive. If the landlord has a floating rate mortgage, the cost of paying the mortgage went up. For commercial apartment rentals, those companies have debt that now needs to be rolled over at higher rates. > By your logic there should be an incentive for builders to increase the housing stock, but private enterprise aren't building anymore homes now than they were 10, 20, 30, 40, 50 years ago. So is it a problem that they aren't building more or not? If we agree that more housing needs to be built, then the proper incentives must be in place. And a proper incentive may actually be as simple as eliminating a disincentive (e.g. 4 years of environmental review prior to the project's approval). > Available rental stock is down 25%, with demand up 5%. It's great for property speculators, buy-to-let landlords and property developers, people are offering above asking prices simply to secure a home. It's great until it isn't. Interest rates are rising, and mortgages in the UK are much shorter term than in the US. That means the impact of rate hikes is more immediate on housing prices. And if available stock being down is a problem (which it is), the obvious solution is to produce more. Alternatively, I have a modest proposal [0] that would also solve the problem. > Ultimately there shouldn't be 'risk', this mindset is a big problem. Risk is omnipresent. If I purchase property, I have all sorts of risk. My building may burn down. My neighborhood may become undesirable to live in. I might not be able to take a job in a new location. I tried to pick examples that aren't about investment. These are risks that the landlord assumes for me. [0] https://en.wikipedia.org/wiki/A_Modest_Proposal https://en.wikipedia.org/wiki/A_Modest_Proposal
- Baloo 4y ago
  >The housing in UK is in crisis because there have not been enough homes built. >So is it a problem that they aren't building more or not? If we agree that more housing needs to be built, then the proper incentives must be in place. And a proper incentive may actually be as simple as eliminating a disincentive (e.g. 4 years of environmental review prior to the project's approval). And this is a part of why it should be administered by governments and not just let loose to market forces. Homes can't just be built wherever, whenever. It should be meticulously planned and integrated with various public services. There's no real financial incentive to build 100,000 houses in the middle of nowhere, it needs to have schools, hospitals, infrastructure etc. A property developer would rather squash a bunch of apartments or buy some old stock, refit everything and charge a premium. >It's great until it isn't. Interest rates are rising, and mortgages in the UK are much shorter term than in the US. They actually suggested recently to offer multi-generational mortgages... That's how crazy the market is getting. >These are risks that the landlord assumes for me. Those are risks your landlord should have insurance for. In a world where property isn't such a commodity, those risks don't really have the same meaning or value. We've largely left house building to the 'market forces' and it is failing us, that is the reality. What happened to the second largest construction firm in the UK? "The largest ever trading liquidation in the UK – which began in January 2018" - Carillion collapsed with £7 billion in liabilities. "One of the UK's biggest landlords, owns over 1,000 properties, tried to ban 'coloured' people from renting because of the curry smell" - What happens to people that are 'undesirable' to landlords, they need a home too or should they simply be destitute or constantly bounced around the lowest standard of housing stock available? Rent caps are probably not effective or radical enough to actually solve this crisis. I think if we really want to do something, it's going to hurt a lot of peoples 'net worth'.
hedora 4y ago
It takes two parties to increase the price of a housing unit. If rents are up 20% that means people are willing to pay 20% more. I don't know about the UK, but here in California, prices have skyrocketed, but so has the price of construction. There are two reasons that has happened: 1) Shortage of construction workers. The ones that are here are either (well paid) first generation immigrants, make more than Silicon Valley windfall money because they speak fluent English and are competent, or are completely incompetent. We don't have enough of the first group, so be prepared to pay 2-3x the cost of materials to get anything done (with the second group acting as middle men, and the third group taking your money, only to have you pay someone else to fix it later). 2) Policies that discourage the building of new rental units: 2a) We have a vacant house on our property. A non-structural remodel for it would cost > $50K to get through permitting, and we're looking at >> $300 sq/ft for the actual remodel. If we did all that, we could either pay a special tax on vacation homes owned by individuals in unincorporated areas that the townies just passed (to help the housing crisis by somehow freeing up housing units in town, where the tax does not apply), or we could rent it out. If we rented it out to a problem tenant, we could literally never get rid of them (unless they decided to not pay rent, but even then, it's 5+ years of court battles). So the house stays vacant. 2b) We just built a house. It took almost a year to clear permitting, and $100K's of wasted nonsense work. Many developable plots in this area are purchased, planning bankrupts the new owners, and then they're sold to the next saps. According to the neighbors, getting permits to build a house around here in under 3 years is unheard of. The result? We have a house, but we are way, way, under water in terms of money put in vs. current valuation. At the lower valuations, the houses around here are not "affordable" by any means. However, if you look at what it would have cost us to develop this land anywhere else in the country, we would have paid way under market value. Problem (1) could be fixed by encouraging contractors from out of the state to fly in to work here. Apparently, the state has erected licensing barriers to make this hard. I think a lot of money ($1B) is waiting to be taken off the table via arbitrage. Problem (2) is consistently worsened by voters that think that capping housing costs, "protecting tenants" and other things that further constrict housing supply will somehow lower prices. The easiest way out of this problem is (1) allow out-of-state firms to build housing and (2) fast-track all new housing permits, including financial liability if the planning commission creates unnecessary delays, unnecessary work, or approves / passes inspection on substandard work. They should also replace the state wide mandate to reduce commuter miles (which is basically a mandate to increase congestion by tearing out roads) with a mandate to reduce the total carbon emissions per capita spent on transit (which would be a mandate to invest in public transit, bike lanes, and in reducing congestion). None of those things are politically tenable, so I guess the millennials will just live in RVs or 4-to-a-bedroom until the voting population turns over.

by Baloo 4y ago

wahnfrieden 4y ago

feet 4y ago
Yea, and they're disagreeing. What are you trying to say?
- wahnfrieden 4y ago

nickles 4y ago

> Here in the UK our housing is in major crisis because people simply cannot afford the insane price increases. Pretty much everyone I know shares their living situation, on their own they would not be able to afford basic amenities. The housing in UK is in crisis because there have not been enough homes built. My rent has gone up too, but it's not because my landlord is greedy. The cost of maintaining the building has gone up thanks to inflation (plumbers/electricians/superintendent/etc.) all have to be paid higher wages. Replacing broken fixtures is more expensive. If the landlord has a floating rate mortgage, the cost of paying the mortgage went up. For commercial apartment rentals, those companies have debt that now needs to be rolled over at higher rates. > By your logic there should be an incentive for builders to increase the housing stock, but private enterprise aren't building anymore homes now than they were 10, 20, 30, 40, 50 years ago. So is it a problem that they aren't building more or not? If we agree that more housing needs to be built, then the proper incentives must be in place. And a proper incentive may actually be as simple as eliminating a disincentive (e.g. 4 years of environmental review prior to the project's approval). > Available rental stock is down 25%, with demand up 5%. It's great for property speculators, buy-to-let landlords and property developers, people are offering above asking prices simply to secure a home. It's great until it isn't. Interest rates are rising, and mortgages in the UK are much shorter term than in the US. That means the impact of rate hikes is more immediate on housing prices. And if available stock being down is a problem (which it is), the obvious solution is to produce more. Alternatively, I have a modest proposal [0] that would also solve the problem. > Ultimately there shouldn't be 'risk', this mindset is a big problem. Risk is omnipresent. If I purchase property, I have all sorts of risk. My building may burn down. My neighborhood may become undesirable to live in. I might not be able to take a job in a new location. I tried to pick examples that aren't about investment. These are risks that the landlord assumes for me. [0] https://en.wikipedia.org/wiki/A_Modest_Proposal https://en.wikipedia.org/wiki/A_Modest_Proposal

Baloo 4y ago
>The housing in UK is in crisis because there have not been enough homes built. >So is it a problem that they aren't building more or not? If we agree that more housing needs to be built, then the proper incentives must be in place. And a proper incentive may actually be as simple as eliminating a disincentive (e.g. 4 years of environmental review prior to the project's approval). And this is a part of why it should be administered by governments and not just let loose to market forces. Homes can't just be built wherever, whenever. It should be meticulously planned and integrated with various public services. There's no real financial incentive to build 100,000 houses in the middle of nowhere, it needs to have schools, hospitals, infrastructure etc. A property developer would rather squash a bunch of apartments or buy some old stock, refit everything and charge a premium. >It's great until it isn't. Interest rates are rising, and mortgages in the UK are much shorter term than in the US. They actually suggested recently to offer multi-generational mortgages... That's how crazy the market is getting. >These are risks that the landlord assumes for me. Those are risks your landlord should have insurance for. In a world where property isn't such a commodity, those risks don't really have the same meaning or value. We've largely left house building to the 'market forces' and it is failing us, that is the reality. What happened to the second largest construction firm in the UK? "The largest ever trading liquidation in the UK – which began in January 2018" - Carillion collapsed with £7 billion in liabilities. "One of the UK's biggest landlords, owns over 1,000 properties, tried to ban 'coloured' people from renting because of the curry smell" - What happens to people that are 'undesirable' to landlords, they need a home too or should they simply be destitute or constantly bounced around the lowest standard of housing stock available? Rent caps are probably not effective or radical enough to actually solve this crisis. I think if we really want to do something, it's going to hurt a lot of peoples 'net worth'.

hedora 4y ago

It takes two parties to increase the price of a housing unit. If rents are up 20% that means people are willing to pay 20% more. I don't know about the UK, but here in California, prices have skyrocketed, but so has the price of construction. There are two reasons that has happened: 1) Shortage of construction workers. The ones that are here are either (well paid) first generation immigrants, make more than Silicon Valley windfall money because they speak fluent English and are competent, or are completely incompetent. We don't have enough of the first group, so be prepared to pay 2-3x the cost of materials to get anything done (with the second group acting as middle men, and the third group taking your money, only to have you pay someone else to fix it later). 2) Policies that discourage the building of new rental units: 2a) We have a vacant house on our property. A non-structural remodel for it would cost > $50K to get through permitting, and we're looking at >> $300 sq/ft for the actual remodel. If we did all that, we could either pay a special tax on vacation homes owned by individuals in unincorporated areas that the townies just passed (to help the housing crisis by somehow freeing up housing units in town, where the tax does not apply), or we could rent it out. If we rented it out to a problem tenant, we could literally never get rid of them (unless they decided to not pay rent, but even then, it's 5+ years of court battles). So the house stays vacant. 2b) We just built a house. It took almost a year to clear permitting, and $100K's of wasted nonsense work. Many developable plots in this area are purchased, planning bankrupts the new owners, and then they're sold to the next saps. According to the neighbors, getting permits to build a house around here in under 3 years is unheard of. The result? We have a house, but we are way, way, under water in terms of money put in vs. current valuation. At the lower valuations, the houses around here are not "affordable" by any means. However, if you look at what it would have cost us to develop this land anywhere else in the country, we would have paid way under market value. Problem (1) could be fixed by encouraging contractors from out of the state to fly in to work here. Apparently, the state has erected licensing barriers to make this hard. I think a lot of money ($1B) is waiting to be taken off the table via arbitrage. Problem (2) is consistently worsened by voters that think that capping housing costs, "protecting tenants" and other things that further constrict housing supply will somehow lower prices. The easiest way out of this problem is (1) allow out-of-state firms to build housing and (2) fast-track all new housing permits, including financial liability if the planning commission creates unnecessary delays, unnecessary work, or approves / passes inspection on substandard work. They should also replace the state wide mandate to reduce commuter miles (which is basically a mandate to increase congestion by tearing out roads) with a mandate to reduce the total carbon emissions per capita spent on transit (which would be a mandate to invest in public transit, bike lanes, and in reducing congestion). None of those things are politically tenable, so I guess the millennials will just live in RVs or 4-to-a-bedroom until the voting population turns over.