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I also never understand why it's seen as so important that real estate prices go up. Statements like "Chinese-based parents who are funding their children's pur

I also never understand why it's seen as so important that real estate prices go up. Statements like "Chinese-based parents who are funding their children's purchases are helping the Irish property recovery." from the article always baffle me. Isn't it great if real estate is cheap? It means people can afford to live there and spend there money on other things and keep the economy going that way. I certainly prefer that over what's going on in SF. I understand that often times people will take out mortgages against there houses if the price goes up and that way money goes back into the economy. But in my opinion that's not real money and will only lead to another 2008.

dm2 12y ago
That's what I'm thinking, even if the property and surrounding properties are devalued now at least they would be creating an economy in the city. They could always raise the prices later. I just don't understand how empty could ever be better unless the cost of maintaining a lived in building was higher than a non-lived in building.. Then again, I see the same thing here in the US. Companies like Cisco buy huge office buildings and leave them empty for years. I suppose it's because building prices are cheap now. I always thought it was because there was a movement for workers to work from home more.
marincounty 12y ago
The rent in San Francisco and Marin County is going up too fast. I hate to say this on this board, but I'll be glad when the tech bubble bursts. I have some friends in San Francisco and I'm so glad they are protected by rent control. Marin County only has rent control in San Anselmo. If you live in San Anselmo and you live in a detached "Mother in-law" unit you have rent control. As to Landlords, who consistently raise rents to whatever the market bares--don't complain when your Tenants really don't give a dam about your property, or you? Your tenants know the difference between gouging, and reasonable rent increases. Being a Landlord is a little different than making money in the stock market. That person who has carved out a litte life in your community, and home--sometimes as to pass you in the Hallway in order to get to the bathroom? "But, I'm just doing what Everyone else is doing?" Sometimes--relationships are more important than maximizing capital, maybe that's how the term mother in-law unit came to fruition? "Hell, throw her out--I hear it's cheap to live in Chicago? By Mom!" I just don't get it I guess?
- MichaelGG 12y ago
  SF could fix pricing without rent control by making more units available. New buildings being made, only going to 6 floors -- that's silly. Or vastly improve public transit so that it's seamless to live further away. Complaining about people charging as much rent as the market will hold is as silly as being upset McDonald's is charging as much as they can. It's like, to be expected. Otherwise, you're effectively asking the landlord to gift you money.
- NoMoreNicksLeft 12y ago
  Rent control is what makes the cost of rent go up fast. You get this right? If you're a landlord and afraid that rent control will cheat you someday, you front-load the difference by setting rent at an insane rate before anyone moves in. And since all the other landlords are doing the same, you don't have to worry about anyone undercutting you.
  - DanBC 12y ago
    The English system seems to work. Landlords can charge what they like. But there are Local Housing Allowance rates. These are used by local councils - the organisations who pay Housing Benefits - to set maximums for different styles of properties. (HB is, like the rest of the benefit system weirdly complex but at least LHAs mean someone can understand the maximum possible rent they might be entitled to.) So a person wanting to claim housing benefits has to seek a property priced according to the LHA rates. Since this is a reasonable portion of the rental market people not claiming that benefit also have those cheaper properties available; or they can pay whatever they like for more expensive properties. (People claiming HB used to be able to claim the actual LHA rate, and keep the difference between the LHA and the rent. Government thought this would encourage rent negotiation, by giving people claiming benefit a strong incentive to get cheaper rents. Sadly, HB is subject to massive amounts of fraud and so that system was subverted quickly by fraudsters.) Example rates for Cheltenham, UK: http://www.cheltenham.gov.uk/downloads/file/3659/local_housing_allowance_rates-2014-2015 http://www.cheltenham.gov.uk/downloads/file/3659/local_housi... https://en.wikipedia.org/wiki/Local_Housing_Allowance#Bedroom_Requirement https://en.wikipedia.org/wiki/Local_Housing_Allowance#Bedroo...
tomphoolery 12y ago
> Isn't it great if real estate is cheap? It means people can afford to live there and spend there money on other things and keep the economy going that way. Real estate prices rising means that the people are getting more wealthy. When real estate prices fall, it means that people are most likely getting less wealthy. > I understand that often times people will take out mortgages against there houses if the price goes up and that way money goes back into the economy. What you're describing here is called "re-financing", it's a perfectly normal means of borrowing money against your house if you have enough collateral. I've never heard of people doing it so that money goes back into the economy, it's usually to re-invest money into your house like for construction or whatever, and your monthly payment just increases.
- refurb 12y ago
  I've never heard of people doing it so that money goes back into the economy, it's usually to re-invest money into your house like for construction or whatever Isn't spending the extra money on construction sending the money back into the economy?
- ajmurmann 12y ago
  >Real estate prices rising means that the people are getting more wealthy. When real estate prices fall, it means that people are most likely getting less wealthy. That uses real estate prices as an indicator for how the economy is doing. However, it doesn't mean the economy gets better because real estate prices are up. This almost reminds me of the backyard furnaces during the great leap forward. Metal output was seen as a indicator of good industry and so Mao had everyone melt perfectly good pots and pans and other stuff to improve the indicator. However, most of the metal was useless and the pots and pans were gone. What the article described sounds similar to me. Housing prices are way up, economy indicator looks great, but people are living on the street. > What you're describing here is called "re-financing", it's a perfectly normal means of borrowing money against your house if you have enough collateral. I've never heard of people doing it so that money goes back into the economy, it's usually to re-invest money into your house like for construction or whatever, and your monthly payment just increases. So the money does go back into the economy. Also: Not all re-financing results in a larger mortgage than before. Some people re-finance to get lower interest rates on the same or smaller principal.
logicchains 12y ago
It's seen as important that real estate prices go up because a significant proportion of the population have borrowed money to invest in houses. If real estate prices fall, the wealth of people with houses/mortgages is reduced. One way of looking at this is that a significant proportion of the population have a 'vested interest' in increasing real estate prices. Some would also argue that continuously rising house prices are economically beneficial, as if house prices fall, then the homeowners/mortgagees who lose wealth from the fall will spend less, reducing consumer spending and hence 'harming' the economy.

dm2 12y ago

That's what I'm thinking, even if the property and surrounding properties are devalued now at least they would be creating an economy in the city. They could always raise the prices later. I just don't understand how empty could ever be better unless the cost of maintaining a lived in building was higher than a non-lived in building.. Then again, I see the same thing here in the US. Companies like Cisco buy huge office buildings and leave them empty for years. I suppose it's because building prices are cheap now. I always thought it was because there was a movement for workers to work from home more.

marincounty 12y ago

The rent in San Francisco and Marin County is going up too fast. I hate to say this on this board, but I'll be glad when the tech bubble bursts. I have some friends in San Francisco and I'm so glad they are protected by rent control. Marin County only has rent control in San Anselmo. If you live in San Anselmo and you live in a detached "Mother in-law" unit you have rent control. As to Landlords, who consistently raise rents to whatever the market bares--don't complain when your Tenants really don't give a dam about your property, or you? Your tenants know the difference between gouging, and reasonable rent increases. Being a Landlord is a little different than making money in the stock market. That person who has carved out a litte life in your community, and home--sometimes as to pass you in the Hallway in order to get to the bathroom? "But, I'm just doing what Everyone else is doing?" Sometimes--relationships are more important than maximizing capital, maybe that's how the term mother in-law unit came to fruition? "Hell, throw her out--I hear it's cheap to live in Chicago? By Mom!" I just don't get it I guess?

MichaelGG 12y ago
SF could fix pricing without rent control by making more units available. New buildings being made, only going to 6 floors -- that's silly. Or vastly improve public transit so that it's seamless to live further away. Complaining about people charging as much rent as the market will hold is as silly as being upset McDonald's is charging as much as they can. It's like, to be expected. Otherwise, you're effectively asking the landlord to gift you money.
NoMoreNicksLeft 12y ago
Rent control is what makes the cost of rent go up fast. You get this right? If you're a landlord and afraid that rent control will cheat you someday, you front-load the difference by setting rent at an insane rate before anyone moves in. And since all the other landlords are doing the same, you don't have to worry about anyone undercutting you.
- DanBC 12y ago
  The English system seems to work. Landlords can charge what they like. But there are Local Housing Allowance rates. These are used by local councils - the organisations who pay Housing Benefits - to set maximums for different styles of properties. (HB is, like the rest of the benefit system weirdly complex but at least LHAs mean someone can understand the maximum possible rent they might be entitled to.) So a person wanting to claim housing benefits has to seek a property priced according to the LHA rates. Since this is a reasonable portion of the rental market people not claiming that benefit also have those cheaper properties available; or they can pay whatever they like for more expensive properties. (People claiming HB used to be able to claim the actual LHA rate, and keep the difference between the LHA and the rent. Government thought this would encourage rent negotiation, by giving people claiming benefit a strong incentive to get cheaper rents. Sadly, HB is subject to massive amounts of fraud and so that system was subverted quickly by fraudsters.) Example rates for Cheltenham, UK: http://www.cheltenham.gov.uk/downloads/file/3659/local_housing_allowance_rates-2014-2015 http://www.cheltenham.gov.uk/downloads/file/3659/local_housi... https://en.wikipedia.org/wiki/Local_Housing_Allowance#Bedroom_Requirement https://en.wikipedia.org/wiki/Local_Housing_Allowance#Bedroo...

tomphoolery 12y ago

> Isn't it great if real estate is cheap? It means people can afford to live there and spend there money on other things and keep the economy going that way. Real estate prices rising means that the people are getting more wealthy. When real estate prices fall, it means that people are most likely getting less wealthy. > I understand that often times people will take out mortgages against there houses if the price goes up and that way money goes back into the economy. What you're describing here is called "re-financing", it's a perfectly normal means of borrowing money against your house if you have enough collateral. I've never heard of people doing it so that money goes back into the economy, it's usually to re-invest money into your house like for construction or whatever, and your monthly payment just increases.

refurb 12y ago
I've never heard of people doing it so that money goes back into the economy, it's usually to re-invest money into your house like for construction or whatever Isn't spending the extra money on construction sending the money back into the economy?
ajmurmann 12y ago
>Real estate prices rising means that the people are getting more wealthy. When real estate prices fall, it means that people are most likely getting less wealthy. That uses real estate prices as an indicator for how the economy is doing. However, it doesn't mean the economy gets better because real estate prices are up. This almost reminds me of the backyard furnaces during the great leap forward. Metal output was seen as a indicator of good industry and so Mao had everyone melt perfectly good pots and pans and other stuff to improve the indicator. However, most of the metal was useless and the pots and pans were gone. What the article described sounds similar to me. Housing prices are way up, economy indicator looks great, but people are living on the street. > What you're describing here is called "re-financing", it's a perfectly normal means of borrowing money against your house if you have enough collateral. I've never heard of people doing it so that money goes back into the economy, it's usually to re-invest money into your house like for construction or whatever, and your monthly payment just increases. So the money does go back into the economy. Also: Not all re-financing results in a larger mortgage than before. Some people re-finance to get lower interest rates on the same or smaller principal.

logicchains 12y ago

It's seen as important that real estate prices go up because a significant proportion of the population have borrowed money to invest in houses. If real estate prices fall, the wealth of people with houses/mortgages is reduced. One way of looking at this is that a significant proportion of the population have a 'vested interest' in increasing real estate prices. Some would also argue that continuously rising house prices are economically beneficial, as if house prices fall, then the homeowners/mortgagees who lose wealth from the fall will spend less, reducing consumer spending and hence 'harming' the economy.