Why are house prices rising so fast in a pandemic?
bbc.co.uk
bbc.co.uk
Eventually only the super rich will be able to afford to own a home.
Is this what the world economic forum meant by "You will own nothing and be happy."?
This is a weird phrase when you think about it. Doesn't unseen imply sight? What does 'sight unseen' mean over 'unseen'?
Someone who has viewed only the photos could be argued to have seen the property, yet still remain sight unseen of the property
I might tell my kids, “I can’t stand the sight of your room right now.” Which means I am upset by viewing the condition of their messy room.
It really makes me mad how predictable this has all been.
Not really. We aren't lucky enough to have space in our family home for an office for either my wife or I to work from home For that reason, I am very grateful that I work in a company that has allowed staff to work on site for the last year.
I don't know what she's going to do when she comes off maternity leave. I'm sure that women less determined than her will just return to becoming the defacto childcare for the family.
Teleworking will favour some and disfavour others.
Edit: Your general point is, in my opinion, correct. Covid lockdowns have massively accelerated all that was going wrong, and stopped everything that was going right. Given that at least some forms of gender, wealth, and income inequality were previously going in the right direction, that is one of the things that has been stopped.
Don't discount those women who stay home to take care of baby. I know many women that, after having a baby, realize that they're in a situation that allows them to hang up the rat race and settle into a more simple life of raising a child.
How many YT channels and IG influencers flout their "simple" life and people flock to them? Now imagine you suddenly not only have the means, but a really good excuse to simplify and focus on things that you've come to realize in the last year matter more to you than work. That's where many women (and men) find themselves these days, especially after having many previous leisure activities unavailable. Some have come to realize they really didn't find actual joy from those things, so they cut them out.
And it's why the "return to work" stats for women will continue to be lower than expectations for a good while yet.
Some limitations imposed were of course abused to also hamper democratic processes in some countries ( of course not in countries where the people are the loudest on the matter), which is tragic, but so are makeshift morgues, and once the pandemic subsides populations will expect all limitations to be rolled back, and they will be.
> You have a crisis of your own making and you need to "save" all the people who lost their livelihood because you are literally fighting the Black Death, which kills people in small shops but, by miracle, spares them in Costco or Best Buy
You are probably aware, but people need to eat to survive. So, when trying to limit community spread of an airborne disease, closing down everything is basically as good as you can do - everyone stays home or outdoors in limited groups, and the disease will just stop spreading. However people need to eat, and move, and the fire department, medical services, etc. are still needed, and you can't stop all of that. Is it really that difficult to comprehend why some things were allowed to stay open while others were not?
And considering the example stores you used, you're probably American. Correct me if I'm wrong, but it's local government who did the closing, but the the money to indeed save everyone impacted is coming from the federal government. How does a governor or whatever the equivalent is at the county level profit from the money the feds are giving businesses?
>How does a governor or whatever the equivalent is at the county level profit from the money the feds are giving businesses?
Feds give money to the states too and in much greater quantities than to any business.
I'm not too familiar with American brands ( Best Buy in particular). For them to remain open there was probably some reason like them providing essential supplies like electric appliances - if your oven dies you kinda need a new one asap. In France a special exemption was made for hardware stores, for repairs and as a mental health thing.
But "my freedumb" is more important than other's lives. So the only choice officials have is "force" us to take this serious since we can't be responsible adults.
It's incredible to me just how quickly "not wanting to live under house arrest" has become a "freedumb", and sad how quickly people are willing to throw away hard-fought liberties in the name of supposed public safety.
To briefly address your point - how did India, which certainly did not wear masks, distance, stay at home, or avoid crowded spots, only just have their "second wave" (such as it is, as it is very hard to find any actual data instead of emotionally-appealing news headlines and pictures), when countries that largely followed the rules (like the one I live in) had one over the winter?
What happened to South Korea, once lauded as the example of what can happen if everyone would just wear a mask?
There is very little in the way of a clear indicator that one approach is better than another.
On a related note it’s important to fight for telework culture or this can’t work. Remote work could be the single best thing to happen for the middle class in a generation or two.
A vast number of UK retirement villages would like to disagree with you.
Construction rates in England: https://research.euro.savills.co.uk/_images/350.jpg
Occupancy rate in London: https://i.imgur.com/jX1OpmS.png
For example at least commenting from an European perspective nothing makes sense:
- Real wages (for example in the European Union) are decreasing or stagnant for years - Example data point for 2020 for ex: https://www.statista.com/statistics/264605/development-of-re...
- Most companies are only alive due to governments subsiding jobs, that in reality, do not exist anymore. Ex: KLM and Air France pilots receiving some of the highest salaries in the world, while their airplanes sit on the tarmac.: https://simpleflying.com/air-france-klm-traffic-drop/
The main issue is that very shortly, the increased debt that most countries were forced to incur will be due soon. Very soon and in, ( what else ? ), increased taxation: https://www.bloomberg.com/graphics/2021-coronavirus-global-d...
All this should mean most persons should thing two times before paying inflated values. Clearly is not not happening. In Europe it is common to see interviews with couples who just got into the so called property ladder. Most are actually ashamed of confirming how much they paid for the microscopic house they just purchased...
- Not sure in the US, but in Europe very few young workers are able to get permanent contracts instead of temporary 2-3 years contracts. By law, most countries require those to become permanent contracts after 2-3 renewals but that is not happening. European banks in the last few years, significantly increased the requirements to qualify for a mortgage, requiring both spouses working, permanent work contracts required,minimum apportion of capital sometimes of 10% to 15 % of the value of the house. Just a minority can rely on the "Bank of Papa and Mamma". So this also fails to explain some of the bidding wars seen in the last few months.
It is mostly driven by speculators flush with cheap money and central banks complete irresponsibility. It also shows another massive failure on the part of banks to perform their due diligence concerning future prospects.
Cue now a US budget that throws away 100 years of economic theory and the world will be in for a very VERY rough ride: https://www.nytimes.com/2021/05/27/business/economy/biden-pl...
Initially will be a party worthy of the scenes in the Wolf of Wall Street. The core question here is at which point does THIS matter ? : https://www.visualcapitalist.com/20-trillion-of-u-s-debt-vis...
The other factor is that some people did very well during the lockdown. Overall yes a lot of people suffered, but if you had a well paid job that you could do from home, and didn't need to pay for a season ticket to go to work, buy lunch, haven't spent on a big holiday, haven't been out to the theatre or restaurants, then you may well have expanded your savings quite significantly. With the low number of houses on the market, there doesn't have to be huge numbers of people in that position for them to move house prices.
The market was nearing peak numbers, akin to 2006-2007 pre crash, before the pandemic shutdowns.
Partially because variable rate loans are still a thing. And the FED has kept prime rates at basically 0 since the last crash. And add in a pandemic where there’s now a desire for home office setups….
The oldest Millennials are 40, and more and more of that contingent are arriving in their 'family years', especially given the higher average ages of both marriage and pregnancy.
It seemed to me to be at least in part due to the bizarre contractual setup where even after a vendor had accepted an offer, they could still pull out and sell to a higher bidder. This led to purchasers paying over the top, just in order to try and prevent someone else "gazumping" them.
Of course we bought at the top of that cycle, and a year later our house was worth only 70% of what we paid for it. 2 of the 4 owners in our little row handed their keys to the bank and abandoned their properties as they were well under water with mortgages of significantly more than their property values.
That scarred me for life and I told plenty of people along the way that prices can go down as well as up.
Though with the benefit of hindsight, that's rare and houses are usually ... as safe as houses.
> Of course we bought at the top of that cycle, and a year later or house was worth only 70% of what we paid for it.
Had the contractual setup changed over that period?
When prices are rising, gazumping makes them rise faster, and when the market is tanking, gazundering makes them crash harder.
Just my theory based on observation.
Plenty had 3000 a month daycare bills. Not anymore. Plenty spent 1500 a month on restaurants. Not anymore. In Canada at least, we got to the point where 30% of income was being saved.
> The savings rate in the second quarter of 2020 surged to 28.2 per cent, up from 3.6 per cent before the COVID-19 pandemic struck. [0]
[0] https://nationalpost.com/news/politics/household-savings-in-...
No booze, no eating out, fewer drugs, no entertainment events, no holidays, it cuts across economic groups.
I wish we had US style bankruptcy laws here. Plenty of brit will spend a decade or more having their lives ruined by the last 18months.
>90% of adults don't have kids in daycare.
Even if you assume that all toddlers 1-5 go to day care and all of them have two parents (over 18) and no parents have two toddlers, the max is ~12% of the population. In reality, it's probably closer to ~7%.
Stimulus programs in Canada have been targeted towards loss of income, whether on the individual side through a job-loss cash benefit or on the business side through a wage subsidy program.
To my knowledge, no large jurisdiction in Canada has given out cash payments equivalent to the US stimulus money, so a family that has not suffered job loss (partial or full) will not have gained gross income.
1: https://www.bloomberg.com/news/articles/2016-03-23/chinese-b...
If it forces more people into poverty, it could possibly benefit the CCP.
A move from the expensive city to cheaper regions would generally decrease house prices: the rise in the regions should be more than offset by the fall in London.
So we have to look further for the reason. Perhaps the move is disproportionately driven by Londoners rich enough to have bought a second home, either temporarily or permanently, so there hasn't been selling pressure in the London market. Perhaps there's a worldwide asset bubble and low interest rates, and Northamptonshire houses are just one small part of that.
That being said, if things were down I definitely wouldn't be looking to sell
Only if the people moving out of London owned their homes and were putting them on the market as new properties. If a renter moves out of London, it would show up in these statistics as a net increase in demand for owned housing, and any price effects would take time to percolate through via rent changes.
Yes, but not for investors?
Many of the exurban and rural areas seeing house price increases have not historically been places of high housing demand. It's not hard to build a new house there, it's just that until recently nobody wanted to. A covid-preference-induced exodus from large cities could be the best thing possible to revitalize small towns that, a generation or two ago, saw all of their young people drawn to work opportunities in the city.
So now when a house is presented online, sometimes within a day it says: Please don't respond anymore, our firm can't handle the amount of emails and phone calls. We invited 30 people/couples and then will assess.
Sometimes you can engage in the bidding war without reviewing the property, of course the chance of getting it is highest if you forego any rights you may have to step away from the deal should you run into financing issues. This presents a high risk because couples opt for loaning the maximum amount they can by both working full time. 10 years ago all my friends said: "we're sticking to a property we can afford on 1 salary, for safety and if we run into trouble."
It's already annoying if you have a house to sell for a ridiculous price but imagine what it's like when you are looking for your first property. Hopeless.
I'm glad I live in an acceptable house, but if we were in the market of 10 years ago (when realtors would only negotiate with one person/couple at a time) I would have moved on by now, to something more rural, bigger and with more land.
I feel stuck, it's crazy how different the situation is from 10 years ago.
I think we just needs start building, a lot, and fast. In stead we seem to be stuck on the amount of fixed nitrogen we produces, putting a break on everything (including construction) [0].
[0] https://www.politico.eu/article/netherlands-nitrogen-headach...
Yeah, we had to "strong arm" our landlord into selling to us be essentially breaking our lease and being huge pains in the asses. That is, we refused to allow open houses and showings in June/July of last year. Basically, it was "sell to us or good luck selling some crappy tenants."
It worked out though!
I was apprehensive if it'd sell fast enough or not because it was super challenging to arrange for the monthly mortgage. Even the broker didn't seem all that positive about selling it in the coming months because apparently the demand wasn't too great due to corona. She suggested we price it such a way that I don't lose money.
But. The very first person who viewed the house bid for it, 5% over the quoted price, signed the purchase agreement in like two weeks. I was over the moon, I even made a profit when all I was looking for was to just wrap up things at Netherlands.
It was a clear sign that housing demand was red hot in Amsterdam. The prices were already increasing since ~2015 due to a bunch of factors like Brexit and what not but then this pandemic pushed it to a whole new level. Craziness.
I wonder what's going to happen once that's over, especially if the economy won't be doing good.
The BBC article is already out of date.
Today I talked to agent that helped me buy my place and I asked him whether the prices finally plateaued since that tax incentive is gone now. He said they didn't, the demand is still so high that prices keep growing, even in Amsterdam where they're already very high.
In other words, nobody wants to hold liquid asset at the moment.
That'll do it.