6 ms·

Summary of this article is that we can expect from 0 to 5% year-on-year GROWTH in asset prices, compared to 15% we saw last year. Hardly a brutal downturn in my

by lpapez 4y ago

Summary of this article is that we can expect from 0 to 5% year-on-year GROWTH in asset prices, compared to 15% we saw last year. Hardly a brutal downturn in my opinion.

chewz 4y ago
Nominal price growth below inflation rate. So prices drop in real terms. If your assets/income grows above inflation rate you win...
- pharmakom 4y ago
  Yeah in a high inflation environment nominal growth means little.
randomdata 4y ago
Also, seems like it will also be short-lived so long as food remains scarce. Last time we had food troubles (2007) we saw the housing market crash as investment dollars started gambling on futures contracts, but it wasn't long before people started paying big bucks for the farmland around settlements to try and profit on the production side, making it more costly to build new housing, thereby impacting housing supply and soon bringing all housing back up in price. We're already starting to see insane farmland offers showing up. Maybe this time, especially with increased WFH, we'll start to see more growth away from historical settlements built on prime farmland, but with the high cost of fuel and shipping in general that isn't going to be the easiest transition either.
rmbyrro 4y ago
No wonder why these people are having a hard time convincing others to pay for their writing.
bamboozled 4y ago
I guess this does give people a chance to catch up to save and buy, at some point, it was a rocket ship, now it seems more like a broken old bus.
Chirono 4y ago
I still find it strange that housing is expected to be an appreciating asset class, rather than a depreciating one that requires continual investment to counteract wear and tear etc. I understand that this is largely by design, but it seems odd to me how much this is accepted as fundamental to properties, rather than something that’s been constructed.
- cm2187 4y ago
  Population growth. The city centre doesn't expand but the demand for it does. And logically it should also be a hedge against inflation. I am not sure that our modern economies have the stomach for what it takes to rein in inflation (too leveraged).
  - arcticbull 4y ago
    Zoning. The city center is free to expand upward just about as much as we let it, but the problem is we don't let it so that we can enrich the existing landholders (they are the voting class after all). The city of San Francisco is a prime example. The city makes is utterly impossible to build anything. From 2012 to 2016, SF metro added 373,000 jobs and only 58,000 new houses. The entire western half the city is hard-capped at 4 stories for no reason. There's a whole wikipedia page on it. [1] If you let supply meet demand, the cost of housing converges around the cost of construction give or take, just like in Japan which has seen ~0% inflation-adjusted housing price growth since the mid-90s. [2] This is a simple problem to solve. Allow construction, invest in transit. SF is so obstinate that it's short 82,000 units in its submission of a conforming housing element to the state. [3] The fun part is if they fail to produce a conforming element, the builder's remedy kicks in and the city loses its ability to deny housing (and new builds don't have to go through CEQA). [4] Really in my opinion the Builder's Remedy should the default state. We should do what Japan did and federalize zoning. The federal government does have precedent. At least according to the "trillion-dollar coin" guy, Carlos Mucha. [5] [1] https://en.wikipedia.org/wiki/San_Francisco_housing_shortage https://en.wikipedia.org/wiki/San_Francisco_housing_shortage [2] https://fred.stlouisfed.org/series/JPNCPIHOUAINMEI https://fred.stlouisfed.org/series/JPNCPIHOUAINMEI [3] https://www.sfchronicle.com/sf/article/housing-California-construction-17368517.php https://www.sfchronicle.com/sf/article/housing-California-co... [4] https://www.hklaw.com/en/insights/publications/2022/10/builders-remedy-bay-area-will-soon-face-a-powerful-housing-tool https://www.hklaw.com/en/insights/publications/2022/10/build... [5] https://twitter.com/mucha_carlos/status/1420815462342959105?s=20&t=v7r1edQH9ZFY3i97W9ejKw https://twitter.com/mucha_carlos/status/1420815462342959105?...

by lpapez 4y ago

Summary of this article is that we can expect from 0 to 5% year-on-year GROWTH in asset prices, compared to 15% we saw last year. Hardly a brutal downturn in my opinion.

chewz 4y ago

Nominal price growth below inflation rate. So prices drop in real terms. If your assets/income grows above inflation rate you win...

pharmakom 4y ago
Yeah in a high inflation environment nominal growth means little.

randomdata 4y ago

Also, seems like it will also be short-lived so long as food remains scarce. Last time we had food troubles (2007) we saw the housing market crash as investment dollars started gambling on futures contracts, but it wasn't long before people started paying big bucks for the farmland around settlements to try and profit on the production side, making it more costly to build new housing, thereby impacting housing supply and soon bringing all housing back up in price. We're already starting to see insane farmland offers showing up. Maybe this time, especially with increased WFH, we'll start to see more growth away from historical settlements built on prime farmland, but with the high cost of fuel and shipping in general that isn't going to be the easiest transition either.

rmbyrro 4y ago

No wonder why these people are having a hard time convincing others to pay for their writing.

bamboozled 4y ago

I guess this does give people a chance to catch up to save and buy, at some point, it was a rocket ship, now it seems more like a broken old bus.

Chirono 4y ago

I still find it strange that housing is expected to be an appreciating asset class, rather than a depreciating one that requires continual investment to counteract wear and tear etc. I understand that this is largely by design, but it seems odd to me how much this is accepted as fundamental to properties, rather than something that’s been constructed.

cm2187 4y ago
Population growth. The city centre doesn't expand but the demand for it does. And logically it should also be a hedge against inflation. I am not sure that our modern economies have the stomach for what it takes to rein in inflation (too leveraged).
- arcticbull 4y ago
  Zoning. The city center is free to expand upward just about as much as we let it, but the problem is we don't let it so that we can enrich the existing landholders (they are the voting class after all). The city of San Francisco is a prime example. The city makes is utterly impossible to build anything. From 2012 to 2016, SF metro added 373,000 jobs and only 58,000 new houses. The entire western half the city is hard-capped at 4 stories for no reason. There's a whole wikipedia page on it. [1] If you let supply meet demand, the cost of housing converges around the cost of construction give or take, just like in Japan which has seen ~0% inflation-adjusted housing price growth since the mid-90s. [2] This is a simple problem to solve. Allow construction, invest in transit. SF is so obstinate that it's short 82,000 units in its submission of a conforming housing element to the state. [3] The fun part is if they fail to produce a conforming element, the builder's remedy kicks in and the city loses its ability to deny housing (and new builds don't have to go through CEQA). [4] Really in my opinion the Builder's Remedy should the default state. We should do what Japan did and federalize zoning. The federal government does have precedent. At least according to the "trillion-dollar coin" guy, Carlos Mucha. [5] [1] https://en.wikipedia.org/wiki/San_Francisco_housing_shortage https://en.wikipedia.org/wiki/San_Francisco_housing_shortage [2] https://fred.stlouisfed.org/series/JPNCPIHOUAINMEI https://fred.stlouisfed.org/series/JPNCPIHOUAINMEI [3] https://www.sfchronicle.com/sf/article/housing-California-construction-17368517.php https://www.sfchronicle.com/sf/article/housing-California-co... [4] https://www.hklaw.com/en/insights/publications/2022/10/builders-remedy-bay-area-will-soon-face-a-powerful-housing-tool https://www.hklaw.com/en/insights/publications/2022/10/build... [5] https://twitter.com/mucha_carlos/status/1420815462342959105?s=20&t=v7r1edQH9ZFY3i97W9ejKw https://twitter.com/mucha_carlos/status/1420815462342959105?...