Highlighting the owner-renter differential is an important topic. One thing that creates conflict is that subsidizing home-ownership, makes renting more expensive. Subsidizing mortgages means house prices will go up. Since rents are a flow from housing, a higher house price means higher rents. So there's this conflict between homeowners and renters.
It is interesting that you have not included any analysis of the financialization of single family and small homes. Hedge funds and investors (including AirBnb owners) have substantially increased their holdings and are responsible for 20% of home purchases since 2020.
That number rises to 33% in some hotter municipalities. The extreme capital and interest rate advantage of modern funds makes them modern-day feudal estate holders for all intents and purposes. Combined with the high cost and restrictions on new home building, they are creating a significant part of the new renting reality.
We as a society need to ask whether homes are corporate investments or a bedrock of society, as they really cannot be both.
The critical factor to consider in the quest to increase supply in the UK is considered to be the restraints imposed by a planning system that gives too much influence to the permission givers who have a dread that their decisions will be met with criticism by interested parties in the bureaucracy and their local communities. Giving a bureaucrat discretion to deny or limit development panders to sectional influences, causes harm to those least equipped to defend themselves, a form of enslavement, and results in the long run economic decline. It's a recipe for impoverishment due to the decline in national productivity. See: https://www.centreforcities.org/wp-content/uploads/2023/02/The-housebuilding-crisis-February-2023.pdf
The effect of the rapid increase in interest rates on the housing market in the US will be interesting, given the fixed rates over the term of the loan, and even more so in Australia where variable rates apply, many mortgagees now being unable to pay out their mortgage if they are forced to sell. Can house prices advance at a rate that will save new entrants who were sucked into the market by government largess that peaked during the pandemic? Will skyrocketing rents outweigh the influence of increasing interest rates and encourage developers to build? Will local government planners allow developers to build cheaper rentals to meet market demand?
Excellent post, Jeremy. What I have found is that many times, both government and the private entities they hire to conduct its business, or any company, claim one thing-- like they will conduct business in a particular way, but in practice, do nothing even close to what procedures it says it will follow. I liken this to the home appraisal process which is supposed to be conducted according to set criteria, but as these examples point out, it doesn’t always work that way.
Interesting on how nearly all of the "progressive" cities are the ones failing the most at fair housing prices and opportunities. You reap what you sow.
Why owning a home in America is so hard
Great article! We've also written about housing affordability - one solution we discussed is the expansion of city transit as it is a policy that benefits everyone (and in many cities will pay off) - https://nominalnews.substack.com/p/housing-and-public-transit-in-cities
Highlighting the owner-renter differential is an important topic. One thing that creates conflict is that subsidizing home-ownership, makes renting more expensive. Subsidizing mortgages means house prices will go up. Since rents are a flow from housing, a higher house price means higher rents. So there's this conflict between homeowners and renters.
It is interesting that you have not included any analysis of the financialization of single family and small homes. Hedge funds and investors (including AirBnb owners) have substantially increased their holdings and are responsible for 20% of home purchases since 2020.
That number rises to 33% in some hotter municipalities. The extreme capital and interest rate advantage of modern funds makes them modern-day feudal estate holders for all intents and purposes. Combined with the high cost and restrictions on new home building, they are creating a significant part of the new renting reality.
We as a society need to ask whether homes are corporate investments or a bedrock of society, as they really cannot be both.
The critical factor to consider in the quest to increase supply in the UK is considered to be the restraints imposed by a planning system that gives too much influence to the permission givers who have a dread that their decisions will be met with criticism by interested parties in the bureaucracy and their local communities. Giving a bureaucrat discretion to deny or limit development panders to sectional influences, causes harm to those least equipped to defend themselves, a form of enslavement, and results in the long run economic decline. It's a recipe for impoverishment due to the decline in national productivity. See: https://www.centreforcities.org/wp-content/uploads/2023/02/The-housebuilding-crisis-February-2023.pdf
Your work is most admirable. Great to see data based analysis rather than the usual fluff.
The experience in Auckland New Zealand is enlightening. See: https://www.afr.com/policy/economy/how-auckland-took-on-the-nimbys-and-won-20230522-p5da9o
The effect of the rapid increase in interest rates on the housing market in the US will be interesting, given the fixed rates over the term of the loan, and even more so in Australia where variable rates apply, many mortgagees now being unable to pay out their mortgage if they are forced to sell. Can house prices advance at a rate that will save new entrants who were sucked into the market by government largess that peaked during the pandemic? Will skyrocketing rents outweigh the influence of increasing interest rates and encourage developers to build? Will local government planners allow developers to build cheaper rentals to meet market demand?
Excellent post, Jeremy. What I have found is that many times, both government and the private entities they hire to conduct its business, or any company, claim one thing-- like they will conduct business in a particular way, but in practice, do nothing even close to what procedures it says it will follow. I liken this to the home appraisal process which is supposed to be conducted according to set criteria, but as these examples point out, it doesn’t always work that way.
Tell us about your experience trying to buy a home and any difficulties you may have had
Interesting on how nearly all of the "progressive" cities are the ones failing the most at fair housing prices and opportunities. You reap what you sow.