- western house prices are driven (up) mostly by available mortgages and a vaguely poor future discounting ability by most people. In other words adding 10k to the offer just to get the win does not add much to your mortgage but gets you a house.
- increases in rates badly hurts people
- a free market in real estate is never really going to happen (because politics) but if it existed it would move the politics over to other parts of the economy- if people could not afford to live in the city, wages would need to be adjusted.
In short there is no place for a "free" market because the point of human civilisation is to protect (ourselves / our tribe / those we sympathise with) people from the cold winds of unfettered nature. Whatever part of the whack-a-mole politics is being focused on, the end goal is "decent lifestyle with minimised suffering / extremes".
Ie - insurance against the worst.
providing insurance against the worst for all society is either a question of paying the huge cost of tragedy for everyone as their tragedy hits, or it is a question of government laying their hands across all ye whack-a-moles and trying to prevent anyone from having the worst outcomes.
I think I am arriving at a theory of government that has the goals of totalitarianism but different methods - probably Thaler's Liberterian Paternalism.
Anyway - understanding the mechanisms of the housing market is important from mortgage availability, land availablity, road and infrastructure building and workers available all seem the big parts.
I mean you can just look at practical, realist governments like in Singapore, and even China to some extent.
The problem is once you're deep in the problem, how do you get out? If you let prices collapse then a lot of homeowners will face negative equity.
It's scary in Europe where we are facing rising interest rates coupled with the energy crisis and cost-push inflation from that and supply chain issues. It's like the governments have just accepted that hundreds of thousands of people will face redundancy and homelessness next year, with no plan whatsoever.
> The problem is once you're deep in the problem, how do you get out? If you let prices collapse then a lot of homeowners will face negative equity.
Easy. You tax the shit out of non-primary and empty residences. This puts negative pressure on 'investing' into a house/apartment and waiting for it to appreciate, then selling it, without ever living in it or renting it. This also doesn't disadvantage people who bought to live.
Many locations already do this, though I guess it could be increased. Where I live now, non-owner occupied housing pays 4-5x more in property taxes. It most likely get passed on to renters.
It also has a weird effect in a nearby, very expensive neighborhood where most of the houses are vacation homes. Since locally, a total property tax number is decided and then split among houses, anyone actually living in the very expensive neighborhood is subsidized by second homes and pays some of the lowest property taxes around.
China has its own problems, so not sure which portion you are referring to. In China, there is almost nothing to invest in except for houses. The Chinese stock market is filled with scams, and I've heard many Chinese don't dare to touch it. So everyone invests in housing (apartments), and prices go through the roof. Some years ago, the government restricted investment, limiting the number of properties a person can own. So people put properties in their relatives or children's name.
Aside from those issues, recently Evergrande (one of China's biggest real estate developers) failed to service it's debt, and is considered by many to be extremely over leveraged. China recently updated regulation to place stricter limits on real estate developers debt.
In Europe (or at least Sweden) you don’t make money by working; you make it on your home appreciation. People even talk openly about their “housing careers”. I’m not kidding, that’s the exact wording they use and it’s a mainstream term, e.g. used regularly on Swedish television. You can regularly hear indoctrinated youth say things like “when you own a home you pay (interest) to yourself” and other such nonsense.
Now all those that bought into this giant Ponzi scheme of course want to be made whole, with tax money. It will get ugly for sure, and I’m not at all certain that they won’t succeed (to the unspeakable detriment of the country/continent).
> In short there is no place for a "free" market because the point of human civilisation is to protect (ourselves / our tribe / those we sympathise with) people from the cold winds of unfettered nature. Whatever part of the whack-a-mole politics is being focused on, the end goal is "decent lifestyle with minimised suffering / extremes".
If that were even a tiny, tiny bit true, corporations would have been banned from SFH long ago. As would 'investors' and AirBNB...
- western house prices are driven (up) mostly by available mortgages and a vaguely poor future discounting ability by most people. In other words adding 10k to the offer just to get the win does not add much to your mortgage but gets you a house.
- increases in rates badly hurts people
- a free market in real estate is never really going to happen (because politics) but if it existed it would move the politics over to other parts of the economy- if people could not afford to live in the city, wages would need to be adjusted.
In short there is no place for a "free" market because the point of human civilisation is to protect (ourselves / our tribe / those we sympathise with) people from the cold winds of unfettered nature. Whatever part of the whack-a-mole politics is being focused on, the end goal is "decent lifestyle with minimised suffering / extremes".
Ie - insurance against the worst.
providing insurance against the worst for all society is either a question of paying the huge cost of tragedy for everyone as their tragedy hits, or it is a question of government laying their hands across all ye whack-a-moles and trying to prevent anyone from having the worst outcomes.
I think I am arriving at a theory of government that has the goals of totalitarianism but different methods - probably Thaler's Liberterian Paternalism.
Anyway - understanding the mechanisms of the housing market is important from mortgage availability, land availablity, road and infrastructure building and workers available all seem the big parts.