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The housing market in the Anglosphere is a gigantic Ponzi scheme. That these countries shortsightedly decided to make housing the primary driver of middle class

by samr71 3y ago

The housing market in the Anglosphere is a gigantic Ponzi scheme. That these countries shortsightedly decided to make housing the primary driver of middle class wealth will go down as of the the greatest own-goals in history. Worse yet, these nonsense housing and zoning policies have no end in sight, as homeowners are disproportionately those richer, older, and more established, and so will continue to vote in greater numbers for these policies.

deleted 3y ago
[deleted]
cjbgkagh 3y ago
Don’t forget they have to import lots of people to keep the ponzi scheme going.
- bell-cot 3y ago
  Lots of ever-richer-and-richer people.
acover 3y ago
The incentives are hilariously broken. 60-70% of the population owns homes and want to restrict new construction, while the federal government wants to solve economic problems with 2.5% immigration.
- gre 3y ago
  Is restricting new construction the problem? I believe the problem is airbnb, mega-corporations/banks buying up and renting out homes, homes that sit empty trying to get exorbitant rental rates, vacation homes and non-homestead homes that sit empty... When I was in LA, I met up with a friend who brought another friend as a tagalong. He had a job at a software company nearby which we got a tour of, but he lived with his parents 40 minutes away. That night I stayed at an airbnb a three minute drive from the office that would have been perfect for the guy to own and live in. The airbnb was a 2br/2bath with electric locks on the outside and inside doors so they could double-rent it for the night. Landlords, empty houses, and airbnb are destroying the lives of young people.
  - harmmonica 3y ago
    Tangential to the broader topic here, but what's just happened in NYC with Airbnb, provided enforcement actually takes place, is going to be very telling in the coming months and could have far-reaching implications for the housing market, specifically in those markets that are popular Airbnb destinations. I have a very small, entry-level apartment in a popular downtown neighborhood in NYC (yep, I'm a landlord--guilty!). Tenants usually only stay for a year or two given a bunch of different reasons, but the reason I bring that up is that I have a long history with the NYC rental market. I had a tenant move out this summer and for the first time in years (barring 2020 when Covid was in full swing), the place usually rents out within days of it being listed. This year, however, it not only didn't rent out right away, but required decreasing the rental rate to finally find a tenant. And this when all the industry stats stated that comparable apartment rental rates, as of June, were up 8% yoy. Now there are of course myriad reasons this particular apartment could be facing headwinds, but I am more or less convinced that the magnitude of the shift from short-term to long(er) term rentals that has been happening in anticipation of the Airbnb ban is the reason for this drop in rental rates. And just to quantify this n=1 data point, the price drop from last year's rental rate was 5%. If you believe the industry stats saying that prices were up 8% yoy in June, which likely were based on Q2 stats, well before short-term landlords would've been faced with the Airbnb ban, this may actually mean that the rental rate drop was ~12%. Nothing about what I wrote above is scientific, but if these numbers (https://www.wired.com/story/airbnb-ban-new-york-numbers/ https://www.wired.com/story/airbnb-ban-new-york-numbers/) are to be believed, it seems likely that the drop in rental rate is largely attributable to the Airbnb ban. The yoy Q4 '23 numbers, when the ban will have been in place for the entire quarter, will confirm or deny all of this. If confirmed, though, will be interesting to see if other cities start to aggressively cut back on Airbnb in an effort to reduce rental rates. Again, not saying this is hard data, but if regulating Airbnb more or less out of existence resulted in a 12% drop in rental rates across major markets nationwide, that would be an amazing lever to almost-immediately decrease rental rates, even though the knock-on effects of declining real estate valuations would potentially cause significant problems. And I say that as a happy Airbnb user, a landlord and a homeowner. Things have just gotten too out of whack with the housing market so you have to somewhat cheer the possibility that there's actually a (low-caliber) silver bullet to reduce rents more or less overnight.
generic92034 3y ago
I think this is not specific for the Anglosphere.
- phatfish 3y ago
  Indeed, a strange comment considering that Chinese property companies are the ones billions in debt and were using deposits buyers made on one property as leverage to build another somewhere else.
tootie 3y ago
-1 for abusing the term "Ponzi scheme" but otherwise I'm with you. Ponzi implies this was some elaborate conspiracy with a puppeteer at the top when it reality it's an emergent property of 50 years of misaligned incentives playing out in similar ways across multiple nations in similar ways. The postwar years saw a huge boom in housing construction which created a few decades of housing availability that may just never exist again nor should it. Housing as a vehicle for building wealth and housing becoming unaffordable for the younger generation are two sides of the same coin.
- epicureanideal 3y ago
  > The postwar years saw a huge boom in housing construction which created a few decades of housing availability that may just never exist again nor should it. There's plenty of demand for housing. There's no reason we can't build more to meet that need, other than regulation.
  - hungryforcodes 3y ago
    This is true and not true. Desirable land aka location is where everyone wants to buy. This drives the price up. Building in the middle of nowhere increases available housing, but doesn't solve the problem really, because no one wants to live there. In theory remote work could help with this problem, but honestly it's really only available to workers who work in offices. People with physical jobs like Amazon warehouse workers and restaurant staff and construction workers...all have to live somewhere near where they work.
    - ghaff 3y ago
      >In theory remote work could help with this problem, but honestly it's really only available to workers who work in offices. And I daresay that even most of the professional class who could live anywhere in the country they wanted to probably don't want to live in or near some small midwestern city or many of the other places where housing is relatively cheap. (Some of that is preserving future employment options but even if you take that off the table, there's still almost certainly a common preference for at least the general vicinity of large mostly coastal cities--and tons of excuses why this location or that location is a non-starter.)
gonzo41 3y ago
Australia is afflicted by this insanity as well. We have Trillions tied up in housing. Yet productivity and economic complexity are on the decline because everyone is trying to flip houses and make housing into an investment vehicle rather that invest in new businesses.
- swores 3y ago
  A minor pedantic point: not "as well", since the comment you replied to talked about "in the Anglosphere" which by pretty much any definition certainly includes Australia :)
rcme 3y ago
The real estate market in the US is one of the cheapest in the world relative to incomes. Perhaps real estate is actually more valuable than you’ve been lead to believe.
- epicureanideal 3y ago
  > The real estate market in the US is one of the cheapest in the world relative to incomes. But I'd still prefer it to be the way it was 20-30 years ago, than how it is now. So much more affordable in the past...
  - poulsbohemian 3y ago
    How would you categorize it as being different 20-30 years ago than today? I ask because my observations of friends and family who were buying / selling in that era is that the more things change, the more they stay the same. When I think about the baby boomers I know who have real wealth, every one of them will tell you a story of buying real estate in the 70s and 80s…
    - almost_usual 3y ago
      The early 80s were easily as unaffordable as now with the high rates then.
      - poulsbohemian 3y ago
        Yes, and yet people bought and sold properties and those that held eventually saw their asset appreciate. And that’s my point - “Before all was the land…” is the start of many opening chapters on real estate, because oil, mining, timber, housing, commerce - it all ties back to this physical asset. It is innately an immovable asset thus it will always have value and that value will fluctuate (generally increasing…) based on its marketability and use. So sure - real estate is different in each decade, but overall the treatment of it as an investment has been true as long as there has been civilization. It ain’t a coincidence that retiring Roman soldiers were given land as thanks for their service.
xwdv 3y ago
The problem isn’t housing and zoning. The problem is people absolutely refuse to go live in places where housing is cheap because they’d rather live in the popular hotspots. You want a cheap house? Sub 300k? Come to the Midwest, you’ll get one easy. Oh what’s that? You’d rather live right in downtown San Francisco or Manhattan? Well… Sometimes I think about just selling my expensive city apartment and moving out to a small rural mountain town and finding a wife there.
- jeffbee 3y ago
  Surprisingly, people don't think that living under a racist theocracy in Tulsa is a substitute good for living in a liberal democracy.
  - solarhoma 3y ago
    Wow, spoken like a truly superior progressive where the only morally good place to live in the world is SF. And, apparently every other city will get you killed due to racism. Please consider never leaving your ‘liberal democracy’ because folks like you destroy cities.
  - reducesuffering 3y ago
    Really? Painting all of the Midwest as a "racist theocracy?" Those $300k homes are also Nebraska, Kansas, the Dakotas, even blue states like Minnesota, Illinois, and Michigan.
  - poulsbohemian 3y ago
    You aren’t wrong, but I also want to throw out a challenge to anyone with similar thinking: help us. You might be surprised by the number of people living in deep red areas who crave political change. We can’t do it without political and financial support from the more liberal parts of each state / the country. There’s even the option of moving here and being part of boots-on-the-ground change. Some of these communities can and will change in my lifetime, even if it is a slow process. And the housing is cheaper too.
    - 3y ago
tempsy 3y ago
housing is expensive in coastal metros in 95% of the country you can buy a house for under $400k.
almost_usual 3y ago
> The housing market in the Anglosphere is a gigantic Ponzi scheme. What? Have you seen real estate prices in Hong Kong and Singapore? The US is pretty cheap compared to the rest of the world.
- samr71 3y ago
  (Arguably Hong Kong and Singapore are in the Anglosphere but) Those are city states. Housing in Manhattan is really expensive too.

by samr71 3y ago

deleted 3y ago

[deleted]

cjbgkagh 3y ago

Don’t forget they have to import lots of people to keep the ponzi scheme going.

bell-cot 3y ago
Lots of ever-richer-and-richer people.

acover 3y ago

The incentives are hilariously broken. 60-70% of the population owns homes and want to restrict new construction, while the federal government wants to solve economic problems with 2.5% immigration.

gre 3y ago
Is restricting new construction the problem? I believe the problem is airbnb, mega-corporations/banks buying up and renting out homes, homes that sit empty trying to get exorbitant rental rates, vacation homes and non-homestead homes that sit empty... When I was in LA, I met up with a friend who brought another friend as a tagalong. He had a job at a software company nearby which we got a tour of, but he lived with his parents 40 minutes away. That night I stayed at an airbnb a three minute drive from the office that would have been perfect for the guy to own and live in. The airbnb was a 2br/2bath with electric locks on the outside and inside doors so they could double-rent it for the night. Landlords, empty houses, and airbnb are destroying the lives of young people.
- harmmonica 3y ago
  Tangential to the broader topic here, but what's just happened in NYC with Airbnb, provided enforcement actually takes place, is going to be very telling in the coming months and could have far-reaching implications for the housing market, specifically in those markets that are popular Airbnb destinations. I have a very small, entry-level apartment in a popular downtown neighborhood in NYC (yep, I'm a landlord--guilty!). Tenants usually only stay for a year or two given a bunch of different reasons, but the reason I bring that up is that I have a long history with the NYC rental market. I had a tenant move out this summer and for the first time in years (barring 2020 when Covid was in full swing), the place usually rents out within days of it being listed. This year, however, it not only didn't rent out right away, but required decreasing the rental rate to finally find a tenant. And this when all the industry stats stated that comparable apartment rental rates, as of June, were up 8% yoy. Now there are of course myriad reasons this particular apartment could be facing headwinds, but I am more or less convinced that the magnitude of the shift from short-term to long(er) term rentals that has been happening in anticipation of the Airbnb ban is the reason for this drop in rental rates. And just to quantify this n=1 data point, the price drop from last year's rental rate was 5%. If you believe the industry stats saying that prices were up 8% yoy in June, which likely were based on Q2 stats, well before short-term landlords would've been faced with the Airbnb ban, this may actually mean that the rental rate drop was ~12%. Nothing about what I wrote above is scientific, but if these numbers (https://www.wired.com/story/airbnb-ban-new-york-numbers/ https://www.wired.com/story/airbnb-ban-new-york-numbers/) are to be believed, it seems likely that the drop in rental rate is largely attributable to the Airbnb ban. The yoy Q4 '23 numbers, when the ban will have been in place for the entire quarter, will confirm or deny all of this. If confirmed, though, will be interesting to see if other cities start to aggressively cut back on Airbnb in an effort to reduce rental rates. Again, not saying this is hard data, but if regulating Airbnb more or less out of existence resulted in a 12% drop in rental rates across major markets nationwide, that would be an amazing lever to almost-immediately decrease rental rates, even though the knock-on effects of declining real estate valuations would potentially cause significant problems. And I say that as a happy Airbnb user, a landlord and a homeowner. Things have just gotten too out of whack with the housing market so you have to somewhat cheer the possibility that there's actually a (low-caliber) silver bullet to reduce rents more or less overnight.

generic92034 3y ago

I think this is not specific for the Anglosphere.

phatfish 3y ago
Indeed, a strange comment considering that Chinese property companies are the ones billions in debt and were using deposits buyers made on one property as leverage to build another somewhere else.

tootie 3y ago

-1 for abusing the term "Ponzi scheme" but otherwise I'm with you. Ponzi implies this was some elaborate conspiracy with a puppeteer at the top when it reality it's an emergent property of 50 years of misaligned incentives playing out in similar ways across multiple nations in similar ways. The postwar years saw a huge boom in housing construction which created a few decades of housing availability that may just never exist again nor should it. Housing as a vehicle for building wealth and housing becoming unaffordable for the younger generation are two sides of the same coin.

epicureanideal 3y ago
> The postwar years saw a huge boom in housing construction which created a few decades of housing availability that may just never exist again nor should it. There's plenty of demand for housing. There's no reason we can't build more to meet that need, other than regulation.
- hungryforcodes 3y ago
  This is true and not true. Desirable land aka location is where everyone wants to buy. This drives the price up. Building in the middle of nowhere increases available housing, but doesn't solve the problem really, because no one wants to live there. In theory remote work could help with this problem, but honestly it's really only available to workers who work in offices. People with physical jobs like Amazon warehouse workers and restaurant staff and construction workers...all have to live somewhere near where they work.
  - ghaff 3y ago
    >In theory remote work could help with this problem, but honestly it's really only available to workers who work in offices. And I daresay that even most of the professional class who could live anywhere in the country they wanted to probably don't want to live in or near some small midwestern city or many of the other places where housing is relatively cheap. (Some of that is preserving future employment options but even if you take that off the table, there's still almost certainly a common preference for at least the general vicinity of large mostly coastal cities--and tons of excuses why this location or that location is a non-starter.)

gonzo41 3y ago

Australia is afflicted by this insanity as well. We have Trillions tied up in housing. Yet productivity and economic complexity are on the decline because everyone is trying to flip houses and make housing into an investment vehicle rather that invest in new businesses.

swores 3y ago
A minor pedantic point: not "as well", since the comment you replied to talked about "in the Anglosphere" which by pretty much any definition certainly includes Australia :)

rcme 3y ago

The real estate market in the US is one of the cheapest in the world relative to incomes. Perhaps real estate is actually more valuable than you’ve been lead to believe.

epicureanideal 3y ago
> The real estate market in the US is one of the cheapest in the world relative to incomes. But I'd still prefer it to be the way it was 20-30 years ago, than how it is now. So much more affordable in the past...
- poulsbohemian 3y ago
  How would you categorize it as being different 20-30 years ago than today? I ask because my observations of friends and family who were buying / selling in that era is that the more things change, the more they stay the same. When I think about the baby boomers I know who have real wealth, every one of them will tell you a story of buying real estate in the 70s and 80s…
  - almost_usual 3y ago
    The early 80s were easily as unaffordable as now with the high rates then.
    - poulsbohemian 3y ago
      Yes, and yet people bought and sold properties and those that held eventually saw their asset appreciate. And that’s my point - “Before all was the land…” is the start of many opening chapters on real estate, because oil, mining, timber, housing, commerce - it all ties back to this physical asset. It is innately an immovable asset thus it will always have value and that value will fluctuate (generally increasing…) based on its marketability and use. So sure - real estate is different in each decade, but overall the treatment of it as an investment has been true as long as there has been civilization. It ain’t a coincidence that retiring Roman soldiers were given land as thanks for their service.

xwdv 3y ago

The problem isn’t housing and zoning. The problem is people absolutely refuse to go live in places where housing is cheap because they’d rather live in the popular hotspots. You want a cheap house? Sub 300k? Come to the Midwest, you’ll get one easy. Oh what’s that? You’d rather live right in downtown San Francisco or Manhattan? Well… Sometimes I think about just selling my expensive city apartment and moving out to a small rural mountain town and finding a wife there.

jeffbee 3y ago
Surprisingly, people don't think that living under a racist theocracy in Tulsa is a substitute good for living in a liberal democracy.
- solarhoma 3y ago
  Wow, spoken like a truly superior progressive where the only morally good place to live in the world is SF. And, apparently every other city will get you killed due to racism. Please consider never leaving your ‘liberal democracy’ because folks like you destroy cities.
- reducesuffering 3y ago
  Really? Painting all of the Midwest as a "racist theocracy?" Those $300k homes are also Nebraska, Kansas, the Dakotas, even blue states like Minnesota, Illinois, and Michigan.
- poulsbohemian 3y ago
  You aren’t wrong, but I also want to throw out a challenge to anyone with similar thinking: help us. You might be surprised by the number of people living in deep red areas who crave political change. We can’t do it without political and financial support from the more liberal parts of each state / the country. There’s even the option of moving here and being part of boots-on-the-ground change. Some of these communities can and will change in my lifetime, even if it is a slow process. And the housing is cheaper too.
  - 3y ago

tempsy 3y ago

housing is expensive in coastal metros in 95% of the country you can buy a house for under $400k.

almost_usual 3y ago

> The housing market in the Anglosphere is a gigantic Ponzi scheme. What? Have you seen real estate prices in Hong Kong and Singapore? The US is pretty cheap compared to the rest of the world.

samr71 3y ago
(Arguably Hong Kong and Singapore are in the Anglosphere but) Those are city states. Housing in Manhattan is really expensive too.