Housing Affordability

[Celista]

I don't think that's necessarily a bad thing though. The issue with housing costs is that many young people are moving away from the spacious suburban environments they grew up in and toward big crowded cities, and then are shocked and appalled that a one bedroom apartment costs more to rent than a mortgage on a four bedroom house back in their hometown. But that is just how things go, if you want to live in a modern, vibrant tech hub rather than podunk backwater town or crumbling rust belt hellscape, you have to pay a high price for that privilege.

I question whether it's really a "choice" whether or not to move. People are moving to where there are jobs, most of those places aren't podunk backwater towns. It's creating a Catch-22 in regards to work...people paying through the nose to live in a city where they can find a job. Living to work.

[Lady Dragonheart]

I don't think that's necessarily a bad thing though. The issue with housing costs is that many young people are moving away from the spacious suburban environments they grew up in and toward big crowded cities, and then are shocked and appalled that a one bedroom apartment costs more to rent than a mortgage on a four bedroom house back in their hometown. But that is just how things go, if you want to live in a modern, vibrant tech hub rather than podunk backwater town or crumbling rust belt hellscape, you have to pay a high price for that privilege.

That isn't my experience. From what I've seen, younger people are moving out of urban areas for cheaper, more affordable housing, but accepting what are essentially trailers in a trailer park, most renting instead of owning, hoping that low quality housing costs will offset the distance required to travel to work. More and more are sacrificing modern housing for shoddy, older, and usually not kept up to code housing for the affordability.

That drastically hinders the outlook of the long term housing market.

[Tijuana]

I do not know if this is a Major Issue in the country where you live in.

But in the largest cities in Australia like Sydney & Melbourne , younger Millennials are starting to blame older generations for them not being
able to afford a house.

In Australia, this has become a big Political Issue.
The Elephant in the room is - immigration. So housing is a question of supply & demand.

I believe Canada has been through this, but lots of cashed up immigrants from China have decided to call Australia home.

And the Chinese especially in Sydney are not only purchasing the majority of new apartments but lots of existing dwellings as well.
In fact, Australian housing for sale is on a few Chinese language real estate websites.

Owning your own home is great. Its an asset , it gives you stability and you still have a large Mortgage to pay.

I currently rent my apartment and I am happy.

However, I believe that in some countries like Germany & the Netherlands, that renting a Home is favorable more than owning a home, as it allows
the individual to invest their money into other business ventures etc.

Younger generations blaming older generations for their current misfortune really irks me.
It is the "I am a victim" mentality.

Funny thing is though, lots of Millennials like Immigration.. Its the diversity thing .

From news article quote:

I don't see a future, even in my forties, where home ownership and economic stability are a reality. It is scary, and it is my reality.
And the generations before me don't give a damn.

http://www.smh.com.au/comment/ill-ne...14-gvl0rj.html

At the root of most outrageous housing prices is a government rent control program. In the US, the two highest places to live, are NY and San Francisco. There are such strict rent control laws, that developers feel there is either no profit in building new, or the government does not allow them to build at or below the quality level, or size, that would make units more affordable.

There was huge outrage recently to a company that wanted to build tiny apartments all across the nation. The argument was that "nobody should have to live like this" but really that means nobody is ALLOWED to live like this. There is a fair amount of people looking out for their own real estate values as well; the fear is the higher density or low quality will trickle down the block in regards to value.

[Kellhound]

I don't think that's necessarily a bad thing though. The issue with housing costs is that many young people are moving away from the spacious suburban environments they grew up in and toward big crowded cities, and then are shocked and appalled that a one bedroom apartment costs more to rent than a mortgage on a four bedroom house back in their hometown. But that is just how things go, if you want to live in a modern, vibrant tech hub rather than podunk backwater town or crumbling rust belt hellscape, you have to pay a high price for that privilege.

There are no good reasons to live in a major tech hub, when you can live close to one. Big city living sucks.

[Lady Dragonheart]

It's certainly a problem here in the US. Housing cost is based on what you're willing to pay, and lots of people are willing to pay a higher price for certain locations. Thus increasing the cost of rent or mortgage. I think somewhere in California that 30% of people working people are homeless. Too lazy to find the article.

This is where you need government to step in and put a limit to how much one could charge for rent/mortgage.

I believe that the issue stems from two major factors. The first being that many houses aren't kept up to code, creating many issues and loopholes that can be extorted by either savvy homeowners that rent out, or renters that have good income that can extort their landlords. The second being that the housing market hasn't been "fixed" since the housing market crash in 08'. There are many houses simply left abandoned, uncared for, and are effectively destroying market economies that they reside in. They can't be legally lived in, and banks that have taken them refuse to upkeep them, so they legally and financially blight the neighborhoods that they reside in, driving housing values in the areas down without directly effecting the area outside of their own property (other than squatters, most likely). Banks hate selling them because they get far under their worth because they haven't been for, which looks bad on their accounts which are written under their original value nearly a decade age (with basic depreciation, which isn't bad with housing at the raw level).

TL ; DR: It's a hell of a lot red tape that chokes the housing market since the housing crisis, and it doesn't look like anything will be done about it from any of the four sides involved.

[Celista]

There are no good reasons to live in a major tech hub, when you can live close to one. Big city living sucks.

People live close-in so they don't have a two hour commute to work? Thought that was pretty obvious.

If you work outside the city then it makes no sense to pay for high rent close-in.

[NED funded]

It's certainly a problem here in the US. Housing cost is based on what you're willing to pay, and lots of people are willing to pay a higher price for certain locations. Thus increasing the cost of rent or mortgage. I think somewhere in California that 30% of people working people are homeless. Too lazy to find the article.

This is where you need government to step in and put a limit to how much one could charge for rent/mortgage.

I don't really think this addresses the problem. The issue is basically a supply and demand situation. Supply is low and demand is high, the ideal solution would be to up supply. Fixed prices I think would worsen the situation.

[alexw]

I do not know if this is a Major Issue in the country where you live in.

But in the largest cities in Australia like Sydney & Melbourne , younger Millennials are starting to blame older generations for them not being
able to afford a house.

In Australia, this has become a big Political Issue.
The Elephant in the room is - immigration. So housing is a question of supply & demand.

I believe Canada has been through this, but lots of cashed up immigrants from China have decided to call Australia home.

And the Chinese especially in Sydney are not only purchasing the majority of new apartments but lots of existing dwellings as well.
In fact, Australian housing for sale is on a few Chinese language real estate websites.

Owning your own home is great. Its an asset , it gives you stability and you still have a large Mortgage to pay.

I currently rent my apartment and I am happy.

However, I believe that in some countries like Germany & the Netherlands, that renting a Home is favorable more than owning a home, as it allows
the individual to invest their money into other business ventures etc.

Younger generations blaming older generations for their current misfortune really irks me.
It is the "I am a victim" mentality.

Funny thing is though, lots of Millennials like Immigration.. Its the diversity thing .

From news article quote:

I don't see a future, even in my forties, where home ownership and economic stability are a reality. It is scary, and it is my reality.
And the generations before me don't give a damn.

http://www.smh.com.au/comment/ill-ne...14-gvl0rj.html

Its an issue in pretty much all of the English speaking nations - Canada, US, Australia, New Zealand, UK.

Housing has been turned into a speculative asset class which the old are using to economically gut the young and enrich themselves in the process. It has absolutely nothing to do with immigration because its not as if there is a shortage of buildable land, and in those few locations where this is a problem its possible to build up. But that building is not happening because the older generations don't want it to. Hence the younger generations are absolutely in the right to be very angry about this situation, as its a breaking of the social contract between the young and old upon which the whole system rests. At some point its going to cause some severe political problems because a whole generation is not going to tolerate such a situation in perpetuity.

[Kellhound]

People live close-in so they don't have a two hour commute to work? Thought that was pretty obvious.

If you work outside the city then it makes no sense to pay for high rent close-in.

Well, it took me 1.5 hours to drive from north of Vancouver to Tualatin, and most of that was the "close in" driving. Going home was far worse because of the Hayden Island on ramp.

[Rox the sox]

When you have a large population of people coming from other lands into a market where there is only so many resources eg Housing.
It creates a demand for housing which then forces the prices of the existing housing stock up.

You can build new, you know...

[alexw]

At the root of most outrageous housing prices is a government rent control program. In the US, the two highest places to live, are NY and San Francisco. There are such strict rent control laws, that developers feel there is either no profit in building new, or the government does not allow them to build at or below the quality level, or size, that would make units more affordable.

There was huge outrage recently to a company that wanted to build tiny apartments all across the nation. The argument was that "nobody should have to live like this" but really that means nobody is ALLOWED to live like this. There is a fair amount of people looking out for their own real estate values as well; the fear is the higher density or low quality will trickle down the block in regards to value.

This is just bunkum. All holding rental costs down does is force the underlying price of land down as its this that gains in value in a price driven market. So think of a city in which rental costs have risen, do you think it somehow magically costs more to build a skyscraper just because the rent has gone up? No. So why should it cost more to build? It doesn't. It costs the same before and after. All that has changed is the cost for the plot of land which it sits on, as higher rents mean developers are willing to bid up that plot to higher values which only benefits the original land owner who in reality has contributed nothing.

- - - Updated - - -

You can build new, you know...

.....but it doesn't happen because of laws which prohibit the building of new housing, laws which the boomers and other other older generations have voted for and lobby to keep in place.

[Rox the sox]

.....but it doesn't happen because of laws which prohibit the building of new housing, laws which the boomers and other other older generations have voted for and lobby to keep in place.

Which laws prohibits building new housing?

[xChurch]

I live in one of the most expensive housing markets in the world, thankfully I don't care all that much about owning a home at the moment. Plus the bubble has to burst eventually.

[Tijuana]

This is just bunkum. All holding rental costs down does is force the underlying price of land down as its this that gains in value in a price driven market. So think of a city in which rental costs have risen, do you think it somehow magically costs more to build a skyscraper just because the rent has gone up? No. So why should it cost more to build? It doesn't. It costs the same before and after. All that has changed is the cost for the plot of land which it sits on, as higher rents mean developers are willing to bid up that plot to higher values which only benefits the original land owner who in reality has contributed nothing.

- - - Updated - - -



.....but it doesn't happen because of laws which prohibit the building of new housing, laws which the boomers and other other older generations have voted for and lobby to keep in place.

I'm sorry but, you don't seem to understand my point. The thing you left out, is the restriction on what can be charged for the unit in rent. If a developer can build an apartment building in any city he wants, there is less profit in rent control cities than others, which creates a disincentive to build a new building in those cities. Over time, this leads to a shortage of available units. This goes to extremes in New York, where you may well have to buy and tear down a building, in order to build a taller one. But you can't do that due to renters who have 20 year old rent controls that don't want to lose them, and are not forced to move.

[starlord]

out of everyone my age i know (25-30), 2 have bought houses.

realtors and banks are concerned that millenials arent buying houses, but keep driving up the cost. sooner or later no one will be able to afford a house. suburbs are already dying.

[Kellhound]

Which laws prohibits building new housing?

Urban growth boundary in Oregon generally prevents building outside of the boundary around Portland.

[WskyDK]

It depends on the area, the Midwest and the South has some cheap real estate. But those areas aren't really desirable areas...I know someone will come in to disagree, but overall people are moving to coastal cities for jobs and that has increased housing costs there (along with outside investor influence, which is larger than what most people realize).

Rental rates in SF are atrocious. Here in Portland a *modest* one bedroom close-in will run you $1200/month easily. I actually think the average might be higher now.

Jesus.
Our mortgage payment on our new 3,928sq. Ft home is only $1500
Phoenix Suburb

[Rhyseh]

Firstly immigration has very little impact on housing affordability. The issue stems from a few core problems:

1. Employment options - In Australia there are very few job prospects outside of Sydney and Melbourne. In fact jobs are vanishing from rural communities at an alamring rate.

1.1. This is driven by globalization and the continued sale of business to foreign investment.
Our governmen is incredibly short sighted. Every time they need cash they sell of yet another important public asset, normally to the Chinese government...

2. Investment - At some stage during the 70/80's my parents generation started seeing housing as a securities market. Seeing this issue the government decided to give them tax concessions. But even this wasn't enough so the government continued to lower capital gains tax and make legislation that further enabled this behaviour.

3. Interest rates - interest rates have been at or below 2% for almost a decade. Easy access to credit and interest only loans mean people can afford to borrow more. Especially if they have a property portfolio whose value has doubled in the last four years.

4. Supply - this is another substantial issue. Government planning approvals and zoning restrictions has meant there aren't enough new properties coming up for sale to combat the pressures from points 1 to 3. So prices go up.

5. Foreign investment - at one stage foreign investment accounted for 10% of all property purchases in Sydney.

Some statistics:
The median house price in Sydney is just shy of $1 million.
The median house price is almost 12 times the average income.
On average it currently takes first time home buyers 8 years to save for a deposit.
The average age of first time home buyers is between 30 and 35.
First time home buyers make up ~30% of new motgages over the last three years.

Immigration accounts for a miniscule blip in the property market. The issue with prices in Sydney is that our government kept giving incentives for prior generations to invest in property and they made multiple macroeconomic decisions that forced more people into cities. To top it all off they didn't adequately plan for the growth. Then you have pressure from rich foreign investors and cheap credit.... Well I think a blind man could have seen this coming.... It's also unlikely to get better any time soon... In the last 12 months property prices rose another 19%..

[starlord]

Jesus.
Our mortgage payment on our new 3,928sq. Ft home is only $1500
Phoenix Suburb

i pay 1200$/mo for ~400 sq ft apartment lol. in AK. can rent a room in a house for $800.

[Rhyseh]

Which laws prohibits building new housing?

The ones which release land or zone areas for particular density housing...