4 ms·

Or… the market has been enabled to spend more by elaborate and ever-expanding finance products, which in-turn underwrite pensions and other institutional invest

Or… the market has been enabled to spend more by elaborate and ever-expanding finance products, which in-turn underwrite pensions and other institutional investments, and that has inflated prices. Would there be as much viable demand at a given price point if you could only get a "salary x4" mortgage like you could 15 years ago? Or x2, 25 years ago? We're x10 now. Not controlling lending is the biggest economic failure of the past century.

BugsJustFindMe 2y ago
What is "viable" demand supposed to mean? "Homes"/"Housing units" includes rentals. Mortgage salary ratios are irrelevant here. Do the nonviables just get to live on the street and like it? All you need to do is look at total housing units vs total families to see that demand growth naturally outpaces supply growth because we don't build enough to keep up with population increases.
- oliwarner 2y ago
  > All you need to do is look at total housing units vs total families to see that… … homebuilding outpaces growth of "family units"! In the UK you can track ONS census data back in decades and +1m families, +1.1m households. In the US 2011-21, it's +5m families, +10m homes. Bigger surpluses wouldn't hurt —and I would happily believe there are markets where this isn't true— but this idea of market drought causing inflated prices is too simplistic. What has changed is that banks have leant far more aggressively in the past 30 years. If they hadn't, homes in high demand areas would be demanded by relatively fewer people, prices wouldn't be so buoyant. By "viable" I meant the price point a market bear. There's your SAD. Another change is the proportion of owner-occupied: absolute number in the UK has stayed relatively static, while the number of private landlords has exploded. Two thirds of those privately let properties are on mortgages that again, are a financial product that has been far more aggressively stretched in the past 30 years. High ratio mortgages have lifted this. They allow us to afford more, so the market can charge more at the same level of demand. That means we all have bigger mortgages, the banks make far more in repayments. It's a long game and banks have won. We even bailed them out when it bit them in the arse. What's worse is they lie about the reasons in order to build more, lend more with this idea that it will magically become more affordable. No amount of building can ever be allowed to depress these prices because our institutions depend on a constant rise. I don't have a solution. Creative sale restrictions for newbuilds (eg everlasting price capping, return to state, etc) might be the only way to have a lasting affordable housing stock but as things are, we're only a major financial crash away from the banks being able to take 20% of all mortgaged properties when people can't keep up with repayments, and one more after that to take another 20%. That's where we're heading.
  - BugsJustFindMe 2y ago
    > homebuilding outpaces growth of "family units"! The article literally says the exact opposite. If you're going to disregard the article's data and analysis, I think you need to show your sources so we can look at them together. It seems likely that we're getting tripped up on category definitions, though. The US population grew by over 21 million people from 2011 to 2021 while the average number of people in a US household dropped from 2.58 to 2.51, so it can't be only 5 million families in a relevant/meaningful sense. Atomicizing families that don't actually live under the same roof is disingenuous. An adult moving out of their parents' home becomes their own separate family unit for the purposes of real estate. Though if you want to talk about the steady decline of the average US household size, we can certainly do that. It seems applicable. More people total and fewer people per household does turn into needing more households.

BugsJustFindMe 2y ago

What is "viable" demand supposed to mean? "Homes"/"Housing units" includes rentals. Mortgage salary ratios are irrelevant here. Do the nonviables just get to live on the street and like it? All you need to do is look at total housing units vs total families to see that demand growth naturally outpaces supply growth because we don't build enough to keep up with population increases.

oliwarner 2y ago
> All you need to do is look at total housing units vs total families to see that… … homebuilding outpaces growth of "family units"! In the UK you can track ONS census data back in decades and +1m families, +1.1m households. In the US 2011-21, it's +5m families, +10m homes. Bigger surpluses wouldn't hurt —and I would happily believe there are markets where this isn't true— but this idea of market drought causing inflated prices is too simplistic. What has changed is that banks have leant far more aggressively in the past 30 years. If they hadn't, homes in high demand areas would be demanded by relatively fewer people, prices wouldn't be so buoyant. By "viable" I meant the price point a market bear. There's your SAD. Another change is the proportion of owner-occupied: absolute number in the UK has stayed relatively static, while the number of private landlords has exploded. Two thirds of those privately let properties are on mortgages that again, are a financial product that has been far more aggressively stretched in the past 30 years. High ratio mortgages have lifted this. They allow us to afford more, so the market can charge more at the same level of demand. That means we all have bigger mortgages, the banks make far more in repayments. It's a long game and banks have won. We even bailed them out when it bit them in the arse. What's worse is they lie about the reasons in order to build more, lend more with this idea that it will magically become more affordable. No amount of building can ever be allowed to depress these prices because our institutions depend on a constant rise. I don't have a solution. Creative sale restrictions for newbuilds (eg everlasting price capping, return to state, etc) might be the only way to have a lasting affordable housing stock but as things are, we're only a major financial crash away from the banks being able to take 20% of all mortgaged properties when people can't keep up with repayments, and one more after that to take another 20%. That's where we're heading.
- BugsJustFindMe 2y ago
  > homebuilding outpaces growth of "family units"! The article literally says the exact opposite. If you're going to disregard the article's data and analysis, I think you need to show your sources so we can look at them together. It seems likely that we're getting tripped up on category definitions, though. The US population grew by over 21 million people from 2011 to 2021 while the average number of people in a US household dropped from 2.58 to 2.51, so it can't be only 5 million families in a relevant/meaningful sense. Atomicizing families that don't actually live under the same roof is disingenuous. An adult moving out of their parents' home becomes their own separate family unit for the purposes of real estate. Though if you want to talk about the steady decline of the average US household size, we can certainly do that. It seems applicable. More people total and fewer people per household does turn into needing more households.