The Economist house-price indices
economist.com
economist.com
Given the lack of geographic constraints, it's amazing how expensive the DC area is. In % terms since 2000 it looks like only SF has exceeded it out of the big cities. NYC had a lower increase, and Seattle is only just now getting to a similar level. I hate looking for housing here.
There was an interesting discussion on HN about a year ago about the Greek debt crisis and how the Greek State had effectively increased property taxes to 6%+, to the point where prices cratered and the re-sale market in some areas froze up. I think the catalyst for the discussion was an article about heirs refusing to inherit certain properties because the hassle to sell, and upkeep costs in the meantime, just wasn't worth it. It made me appreciate that if things get bad enough, governments have a legal and fairly accessible mechanism for confiscating a large portion of the property wealth held by their citizens.
But, when the retirement age is 65, you're retired for TWICE as long. That's a huge difference. Either pension contributions need to increase AT LEAST two-fold, benefits cut in half, or retirement age is always set at life-expectancy - 5 years.
Not to mention, somehow now 62 is the new 65. Making the problem almost 3-times as bad.
Meanwhile, in the rest of the civilized world, we are increasing pension age, replacing defined benefits pensions with defined contributions, and lots of micro effects. The pension system is, of course, workable. It just needs adjusting to longer expected lifespans and, of course, increased funding from people of working age.
Problem 1 is the inability to forecast 30 years into the future, problem 2 is the people whose money is being spent (future taxpayers) aren't in the decision making process.
Problem 3 is low voter turnout among non government employee populations, so politicians do whatever they have to make sure government employee unions vote for them.
Problem 4 is no requirement to actually provide accurate funding, because the costs will be understated in the first place (see problem 3), and the liabilities are far into the future so money will be diverted for other pressing matters.
If you think the above is not correct, all you need to do is look at the funding status for all the taxpayer funded pensions in the US, conveniently exempt from the rules that privately funded pensions have to adhere to (which made them disappear because it turns out they're too costly).
However, as long as the US can print money (I.e. have a powerful military), then they can inflate away all these debts the taxpayers have so just try to make sure your assets are inflation resistant, preferably in high cash flow businesses with barriers to entry that can sustain price increases.
Is it really noticeably higher than other comparable cities with good public transit? Also, in my experience, most people don't make real estate decisions based on underfunded pension liabilities.
It's more likely that prices are low for the simple reason that inventory is high: Chicago is geographically massive compared to its coastal brethren like SF or Boston. Even so, if you want to live in a 'hip' neighborhood like Lincoln Park or Wicker Park, you'll still find yourself footing a goodly sum of money. It's neighborhoods like Rogers Park or Bridgeport that are more reasonably priced. This is without even going as far as more denuded areas like Englewood.
Very Georgist!
Most of Chicago's top talent is stuck at places like Boeing or Exelon where they make a good living in the low to mid six figures, but it's really hard to get a huge surge in home prices like in the Bay without employee equity going up 100x, which just doesn't happen with the large mature companies that dominate the landscape in Chicago.
In my experience, this lack of innovation sits squarely on the shoulders of the wealthy in that city. They have expressed very little interest in being educated in the tech space. For example, in 2013, when I tried to explain to them why a bitcoin brokerage could be a good idea, I had to try to educate them in ways that are totally unreasonable. How do you even explain what bitcoin is to someone who only understands basic arithmetic and whose tech chops extend to Excel and web sites? In the end they all just assumed I was pitching a scam, and I don't really blame them, given how the whole thing must just sound fake. But in the Bay, where VCs are run by really intelligent people who can go home to read and understand the white paper and who probably know more than the people they invest in, it's a wonderful starting point.
Lately, VCs like the Pritzker group have really opened up to taking risk at least, but they're kind of just throwing darts randomly into things they don't understand (see Outcome Health). We really need people like Larry Page and Gordon Moore (or whoever, you know what I'm saying) here to help allocate funds in productive ways.
some speculations:
A large part of the German market is renting, even more so in the "hot" cities. Many smaller towns and rural areas are struggling, so there are likely quite a few cheap houses available there which keep an average down, even if home prices in boom areas increase.
Buying a house is one of the few widely "acceptable" reasons to go in debt, but many Germans still try to avoid or at least minimize it.
Any comment?
https://www.youtube.com/watch?v=qpq2eqz6mR0
They also make land available to build on, unlike former UK colonies which all use a combination of zoning to suppress supply and loose credit to increase bidding levels.
All former UK colonies have land bubbles.
https://hotelivory.files.wordpress.com/2010/08/herengracht21...
http://www.personal.psu.edu/bwa10/House%20Prices%20and%20Fun...
It doesn't seem like it should be /too/ hard. I mean, property taxes are going to be different in different regions of each country, but getting a rough average shouldn't be too hard. And it's not too hard to get interest rates for countries for the past 20-ish years.
- different approaches to mortgages (fixed term vs not, different typical terms, etc)
- extremely different tax regimes (e.g., Switzerland has no property tax, does have a wealth tax, and adds to your income an estimated rental cost for the property)
And now once you've gathered all of that data, you get to figure out how to make it all comparable :)
Comparing them is a good point as well. The economist article doesn't go far enough in my opinion.
I'm interested mostly in mortgage payment vs rent. And mortgage payment vs income (after taxes).
Even income after taxes is a little tricky. Not sure if they're are any countries with REALLY high sales tax, but things like that could be worth considering.
Interestingly the amount of council tax you pay is tiered based on a valuation of the property in the 1990s.