There's good news and bad news.....

[W2DR]

I bought a house in California in 1972. It cost me $40,000. The good news is that that house is now worth $1,345,000. The bad news is that I sold it in 1979.

[flyingleaf]

Ah man I did the same in North Vancouver. Sold it in 1980

[Nick Cooper]

10 hours ago, W2DR said:

I bought a house in California in 1972. It cost me $40,000. The good news is that that house is now worth $1,345,000. The bad news is that I sold it in 1979.

 

We have the same problem over here.

My house was built by the state in 1953 and cost around £800.

To buy it today would cost around £245,000, but it is still the same house that was built in 1953.

All that has happened is that the value of the GBP as it is now known has plummeted and  estate agents (realtors?)

have contrived to massively inflate the prices to massively inflate their commission.

The house is still worth £800 but you have to pay £245,000.

It is one of the wonders of "economics".

[boetie]

I worry my 20yo, 18yo and 16yo will never get into the market. They could be renters for life and even the renting market is extreme here. I do the lottery every week. When I get the big one we'll be right.

Cheers

Graeme

[Scott Harmes]

6 hours ago, Nick Cooper said:

All that has happened is that the value of the GBP as it is now known has plummeted and  estate agents (realtors?)

have contrived to massively inflate the prices to massively inflate their commission.

The house is still worth £800 but you have to pay £245,000.

It is one of the wonders of "economics".

 

Yep, and along with the selfish, short sighted real estate agents, the governments do little to stop it as long as they are receiving their stamp duty and their capital gains tax.  I remember reading a newspaper article in 2008 saying that in 30 years the median house price in Melbourne (Australia) would be $1 Million.  I laughed at the time and thought it would be much sooner than that.  I just checked and the median house price in Melbourne (at April 16, 2021) is $1,004,500.

 

There will be a lot of people who will never own a home, whether they work their whole life or not.

[jpreou]

I just sold my house in NZ two months ago - I move out on Friday (long settlement) and it has already increased another $100k (on paper) in that time, as has the house I bought. Housing market is crazy crazy.

[Matt McGee]

High housing prices benefit realtors and governments. 

Realtors' are getting their commission percentage of a larger amount.

Government gets more tax income from everyone's property because it is now "worth" more.  It is essentially a tax increase that people didn't get to vote on.

 

People who sell their home for big bucks are seldom better off because they now need another place to live which will probably be overpriced as well.  The exception being those who can sell in an overpriced market and then take that money to an area that has a lower cost of housing.  (Good luck finding one of those!)

[jpreou]

3 hours ago, Matt McGee said:

Government gets more tax income from everyone's property because it is now "worth" more.  It is essentially a tax increase that people didn't get to vote on.

 

Exactly - I have a real bee in my bonnet about this - so my house after 3 years is valued higher and my rates go up proportionally  -but the cost of supplying the services my rates cover hasn't changed, or at least not by the same rate or anywhere near it. Money grab, pure and simple.

 

3 hours ago, Matt McGee said:

People who sell their home for big bucks are seldom better off because they now need another place to live which will probably be overpriced as well.

 

Exactly again. While my house has increased in value, so too has the house I purchased (albeit not by as much, it seems). I smaller house on a smaller section just around the corner from where I purchased just sold for $60k more than I paid for my new home almost two months ago. Like I said ... crazy, crazy ... I'm pushing the boat out to try to build equity that I can leave t my kids, otherwise they have no hope in hell of home ownership unless there is a sustained market crash. A crash in NZ is certainly possible, but from what I saw in the UK in the mid-90s it will bounce back quickly and higher than ever.

 

3 hours ago, Matt McGee said:

The exception being those who can sell in an overpriced market and then take that money to an area that has a lower cost of housing.  (Good luck finding one of those!)

 

...and I did exactly that when moving from Hamilton to Christchurch 4 years ago - but now I can no longer afford to move back there, so I'm stuck here!   ... and there is the downside...

 

Edited July 7, 2021 by jpreou

[tigermothpilot]

Microsoft Real Estate Simulator coming soon!

[Ripcord]

The key word is market.  There is a market for Real Estate.  And that means supply and demand.  Demand has been steady - people need a place to live, and always will.  If more people are moving to your area, then demand is increasing.

 

The problem that nobody wants to talk about is supply.  Builders are not interested in cranking out mass quantities of affordable housing.  Not profitable, so the new stuff is priced right around the median.  Again, cannot fault them on that.  So a LOT of working class folks are stuck as renters.  It is a big problem in the US and I would say it is not unrelated to many of the other 'problems of the day' that the public/media does seem to want to discuss - homelessness, wealth inequity, people hitting retirement without adequate savings, and yes, taxes.  We better figure out the housing supply thing soon.

Edited July 9, 2021 by Ripcord

[Nick Cooper]

Hello,

another view is that the price of something is only what the vendor and purchaser agree.

"Supply and demand" is something that should not result in an increase in price, although

due to human greed it inevitably does, a perfect example being the ludicrously high prices

being charged by what are apparently known as "scalpers" for the PC hardware that is in

short supply.

 

The culture of and desire for home ownership is far from universal and there are many countries

where home ownership is the exception and the rule is tenancy.

Families rent for life and when they die, their offspring inherit the tenancy.

This is an alien concept in the UK where the standard tenancy is six months.

 

In the UK, the other problem is the greed of the unscrupulous "investors" as they are wrongly

known, who buy up cheap properties and then rent them out at exorbitant prices to anyone who is 

prepared to, or indeed has no choice but to pay.

 

Over here, the housing shortage is much trumpeted but there are hundreds of thousands of homes

that stand empty.

This article is written by a pressure group but nevertheless does add perspective to the 

perceived problem.

 

Arguably, both "scalpers" and unscrupulous "investors" are little different from criminals, the only

real distinction being that the law sanctions their behaviour in the name of "business".

 

[Ripcord]

Price is the point where supply and demand intersect.  At a certain point, you are unwilling to sell me your goods (supply elasticity) and I am willing to buy it only up to a certain point (elasticity of demand).  It is the science of human behavior.  It is apparent, like gravity.

 

I don't know the situation in the UK but I will tell you, Nick, my goal is to become a landlord here.  It will provide income for me and a place to live for some family that is not (yet) ready for home ownership.  

 

But here in the US, the 'system' is set up to promote personal home ownership to as may people as possible and there are a lot of programs and support mechanisms for this.  There is a growing gap now, not as many people as before are qualifying and, again, I asset that it comes down to a real dearth of lower priced supply.

[donbrindles]

On 7/9/2021 at 6:34 PM, Nick Cooper said:

Arguably, both "scalpers" and unscrupulous "investors" are little different from criminals, the only

real distinction being that the law sanctions their behaviour in the name of "business".

 

 

Nick, this discussion seems far removed from flight simulation. However, as even you have been drawn into it I would be interested to explore your comment quoted above. What, in your view would be a "scrupulous" investor? How, if able, would you change the law to criminalize "unscrupulous" investors acting "in the name of business"?

 

Regards, Don.

[Nick Cooper]

Hello Don,

as this is firmly in the Neil Hill Memorial Lounge, the subject matter is fine.

Anything can be discussed here, as long as it does not infringe the forum rules.

 

To me, the definition of unscrupulous is the person whose only aim is to maximise their income.

This is usually manifested in adapting houses to contain far more tenants than it is

designed to accommodate and then charging exorbitant rents while failing to maintain

the property.

One can see images of under stairs cupboards for example, containing no more than a mattress

and yet rented out to those who have no other choice and often few means to pay.

Here is one: Clapham 'bed-under-stairs' advertised for £500 a month - BBC News

 

These would be unscrupulous landlords:

Letting agent rented out flat which council ruled unfit for habitation | Fife Today

Leicester landlord admits renting out property 'unfit for human habitation' - Leicestershire Live (leicestermercury.co.uk)

See inside 'uninhabitable' rental house with dangerous fittings, squalid bathroom and ceiling caving in - Mirror Online

As far as I am aware, the laws are already in place but it is only too easy to ignore them and get away with it.

 

 

 

 

 

 

 

[donbrindles]

Thanks for you speedy response Nick. I agree totally that the examples you cite define unscrupulous landlords. But with respect the comment in your response that "the definition of unscrupulous is the person whose only aim is to maximise their income" is a generalization which is questionable. Consider this. A person holds a cash ISA. Typically, the current annual interest rate for such an ISA is 0.4%...well below current UK inflation rates. The holder would lose money...so this person decides to switch to an investment ISA, managed by a reputable, FCA accredited investment management company. The company offers low, medium and high risk portfolios. This person, being risk averse, opts for a low risk portfolio. But a less risk averse person might opt for a high risk portfolio, seeking to maximize their income. Question:

 

Is this person "unscrupulous" for seeking to maximize their income?

 

Is it acceptable to seek not to maximize their income but to increase it via low or medium risk investment?

[Stillwater]

On 7/6/2021 at 12:24 PM, boetie said:

I worry my 20yo, 18yo and 16yo will never get into the market. They could be renters for life and even the renting market is extreme here. I do the lottery every week. When I get the big one we'll be right.

Cheers

Graeme

That is exactly what I worry about, too. Really a serious problem.

[Nick Cooper]

1 hour ago, donbrindles said:

Is it acceptable to seek not to maximize their income but to increase it via low or medium risk investment?

 

This is entirely in the context of housing and rental accommodation.

Investors in this case are not investors in general but investors who buy up cheap and sub-standard accommodation

and rent it out in the same sub-standard state because their aim is to maximise their return and have no regard to the

living conditions that are offered to tenants.

I had thought that I had made that clear.

I do not seek to widen the discussion beyond the original subject, housing.

Even though Doug's post is somewhat tongue in cheek, it does raise the issues that are being discussed.

 

 

[Bullfox]

There are places in the world with people with money worry about their long term financial prospects.  While they can they are moving their money and themselves into California real estate and driving up prices.  The house we sold in the SF bay area 8 years ago has increased  in value $500,000.00   

 

There is just a lot of money sloshing around here and there along with a lot of unrest.

[donbrindles]

Nick, thanks again. I accept and totally agree with your views about unscrupulous landlords. Perhaps we could both agree that seeking to maximize one's income, per se, is not unscrupulous, but the method by which one seeks to do so, eg the examples you cite, might well be.

 

Regards, Don.

[Nick Cooper]

Hello Don, 

exactly so, in my humble opinion of course.

[gregmorin]

Remember the 2008 real estate bubble burst. The house I bought for $550,000 was now worth $300,000. Mainly caused by market exploitation and margin lending.

 

Greg

[flyingleaf]

On 7/14/2021 at 3:16 AM, gregmorin said:

Remember the 2008 real estate bubble burst. The house I bought for $550,000 was now worth $300,000. Mainly caused by market exploitation and margin lending.

 

Greg

That will come again. Sadly.

[Ripcord]

Real Estate is local.  What is true in Seattle or SF is not true in Houston and Atlanta, etc.  

 

And again, I will attempt to make my point that there simply is not enough supply out there.  They stopped building houses for everybody with a pulse.  We had a glut of inventory from 2009-2012.  Since then demand has outpaced supply.  So if you are expecting a massive crash, just because it happened in 2008-2009, well... I don't see it happening unless there is some massive glut of housing out there that nobody is aware of.