House prices are surging once again(economist.com)
economist.com
House prices are surging once again
https://www.economist.com/finance-and-economics/2024/06/16/why-house-prices-are-surging-once-again
33 comments
I live in, or did until recently technically now I live a little outside, a very competitive housing market. All cash offers have become the norm to secure housing in the most in demand areas even for those purchasing their primary homes vs investment properties.
How this often works is a cash offer financer completes the purchase from the seller and in turn sells it to the buyer once their mortgage has been secured. The buyer rents the house from the financier until this happens. Sometimes the agreement is the financier will only purchase the property if the buyer doesn’t have their mortgage in place by the closing date.
How this often works is a cash offer financer completes the purchase from the seller and in turn sells it to the buyer once their mortgage has been secured. The buyer rents the house from the financier until this happens. Sometimes the agreement is the financier will only purchase the property if the buyer doesn’t have their mortgage in place by the closing date.
"Rohin Dhar, a housing expert, has pointed out that lots of listings in Florida feature the phrase “motivated”, which implies people are selling in a hurry."
Probably trying to escape the silent home insurance crisis in FL more than any other reason.
Probably trying to escape the silent home insurance crisis in FL more than any other reason.
What is the silent home insurance crisis?
The skyrocketing cost of home insurance in Florida is causing some residents to sell their properties and relocate. https://www.newsweek.com/florida-
homeowners-relocating-insurance-crisis-cost-1893248 · Apr 24, 2024
if they say, it wouldn't be silent ;)
https://archive.is/ejnxk
As an Australian house owner, I consider the local perception that house prices have recently been increasing[0] to be largely based on domestic misconception. Rationale: If you take in to account USD/AUD currency shift[1] over the recent period, house prices are functionally flat or thereabouts. This view also accords better with cost of living shifts. Given this 'boots on the ground' view, I find it strange and remarkable that the Economist, which usually has fairly well reasoned journalism (and excellent editing), selects Australia as a stand-out market casually based upon some inspecific Goldies' analysis.
[0] https://www.abs.gov.au/statistics/economy/price-indexes-and-... [1] https://www.macrotrends.net/2551/australian-us-dollar-exchan...
As an Australian house owner, I consider the local perception that house prices have recently been increasing[0] to be largely based on domestic misconception. Rationale: If you take in to account USD/AUD currency shift[1] over the recent period, house prices are functionally flat or thereabouts. This view also accords better with cost of living shifts. Given this 'boots on the ground' view, I find it strange and remarkable that the Economist, which usually has fairly well reasoned journalism (and excellent editing), selects Australia as a stand-out market casually based upon some inspecific Goldies' analysis.
[0] https://www.abs.gov.au/statistics/economy/price-indexes-and-... [1] https://www.macrotrends.net/2551/australian-us-dollar-exchan...
I'm not sure I understand what you're saying, the data is ending in 2021, we're in 2024. The landscape looks quite different after the pandemic rebound.
Also the fact that you compare it to the USD/AUD is silly, 99+% of us aren't paid in USD. If I could barely afford a 1.1M house in 2020 that is now 1.6M, we have a big problem.
The affordability crisis is local first.
We were lucky we bought our house in 2018. It's doubled in value since. Rejoice? No. Why? Because if we sold, it's not like we could afford any better. We've just raised the floor for everyone, essentially locking out the youth. This isn't good by any metrics.
Also the fact that you compare it to the USD/AUD is silly, 99+% of us aren't paid in USD. If I could barely afford a 1.1M house in 2020 that is now 1.6M, we have a big problem.
The affordability crisis is local first.
We were lucky we bought our house in 2018. It's doubled in value since. Rejoice? No. Why? Because if we sold, it's not like we could afford any better. We've just raised the floor for everyone, essentially locking out the youth. This isn't good by any metrics.
I didn't comment on local affordability, which I agree has been bad for 20+ years. What I commented on was the false perception that aggregate value has increased "because the number went up", which seems to dominate local media. Pre/post COVID doesn't seem to have changed that.
Australian houses aren't bought with american dollars though. If this were the case wouldnt we see a big correlation between house prices and USD exchange rates? Why wouldn't the correlation be with other currencies such as china. Honest questions, it seems to me like massive immigration/low supply seems to e plain things pretty well.
There is a housing shortage caused by excessive regulation. High prices will continue until until it’s addressed.
The excessive regulations are restrictive zoning. There's plenty of land to build in LA and San Francisco but too many nimbys who keep things from not changing.
It doesn't help that an unprecedented amount of immigrants, mostly illegal, have been let into the country to suppress wages. That puts upward pressure on house stock.
It doesn't help that an unprecedented amount of immigrants, mostly illegal, have been let into the country to suppress wages. That puts upward pressure on house stock.
Yeah regulations like fire safety. Roll those back.
The US actually has higher rates of fire fatalities than other, denser OECD countries. https://www.usfa.fema.gov/downloads/pdf/statistics/v12i8.pdf
If the current zoning regulations are an attempt to have people not die in fires, they’re not working that well.
If the current zoning regulations are an attempt to have people not die in fires, they’re not working that well.
Dont be disingenuous with strawmen.
It has everything to do with restrictive zoning and building codes. NYC is a prime example, there are tons of empty commercial office buildings. But they will never house people because building codes require every room to have natural light. Rules also restrict share and boarding houses which used to provide affordable housing to many people.
No one said affordable housing needed to have windows in every room or home very room to have a bathroom. They're affordable for a reason and this is the norm in every other part of the world.
It's time to start thinking like every other country and culture.
It has everything to do with restrictive zoning and building codes. NYC is a prime example, there are tons of empty commercial office buildings. But they will never house people because building codes require every room to have natural light. Rules also restrict share and boarding houses which used to provide affordable housing to many people.
No one said affordable housing needed to have windows in every room or home very room to have a bathroom. They're affordable for a reason and this is the norm in every other part of the world.
It's time to start thinking like every other country and culture.
What do you say about the reasons those regulations exist? It didn’t start that way; they were added after years and events.
Also, NYC has a lot of new residential buildings going up. I see them all over. But every time I look up what’s it’s for, it’s for the ultra-wealthy - $10s of millions per (huge) condo.
Also, NYC has a lot of new residential buildings going up. I see them all over. But every time I look up what’s it’s for, it’s for the ultra-wealthy - $10s of millions per (huge) condo.
There is a lot of pent up demand. In a society where housing is provided by the market, those who can pay get served first. Stifling more construction doesn’t really lower prices; look at the Lower East Side and Soho where people pay out the nose to live in literal tenements.
It is hard to overstate how much housing would need to be built. To get housing affordable, Sweden committed to building 1M units over a decade in the 70s when the population of the country was 7M. In the 2010s, NYC had a population over 8M and built about 200k units.
While the Bloomberg administration had a reputation of being developer and upzoning friendly, it actually also did a lot of downzoning, and net housing capacity barely budged. https://www.politico.com/states/new-york/city-hall/story/201...
It is hard to overstate how much housing would need to be built. To get housing affordable, Sweden committed to building 1M units over a decade in the 70s when the population of the country was 7M. In the 2010s, NYC had a population over 8M and built about 200k units.
While the Bloomberg administration had a reputation of being developer and upzoning friendly, it actually also did a lot of downzoning, and net housing capacity barely budged. https://www.politico.com/states/new-york/city-hall/story/201...
The shirtwaists aren't going to triangle themselves now.
This is highly variant depending on where you live, and in many places the prices are dropping.
Annoying becauae someone on my block with a similar comp just put their house for sale at 370 and I bought for 395. This is on Texas where prices are saner.
I can confirm the same for my locality in India. ~20 to ~30% jump in last 1year.
This is hardly a surge though. Only 3 to 6 percent increase year over year.
6.5 YoY in the US would be double YoY inflation.
That is still less than average in the past 30 years, no?
That it is less bad doesn’t make it good considering 30 years of this has led to the current housing crisis.
I'm not evaluating bad or good, it just doesn't seem like a "surge" or "soaring" if it's below average historically.
It is a surge compared to last year’s activity with flat or declining prices in markets.
The layperson is generally not using a thirty year rolling average as a baseline, and the headline makes no attempt to say it is a historic anomaly.
The layperson is generally not using a thirty year rolling average as a baseline, and the headline makes no attempt to say it is a historic anomaly.
The statistic in your area you are seeking is the Case Schiller Index.
A six percent annual increase will double prices in twelve years.
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Why does real estate remain relatively strong in some countries? Likely because savvy investors either want to live there or believe others will.
Real estate prices in California are at their peak, and while the media might anticipate a housing crash, it's unlikely. With large amounts of money needing a place to go and states like Florida enacting xenophobic policies that deter investment, California remains an attractive option.
[1] [NAR Realtor Blog](https://www.nar.realtor/blogs/economists-outlook/the-share-o...)
[2] [CNN](https://amp.cnn.com/cnn/2024/06/17/homes/florida-law-bans-ch...)