Hacker News Reader

Comment by mdorazio | Hacker News Reader

Serious question: is there any desirable city right now that doesn't have a housing crisis? A few weeks ago the discussion on HN was about Canada, this week it's about Australia, take your pick of coastal US cities and it's the same. I've heard people moving to parts of Europe for lower-cost housing are doing well, but that presumes you have a mobile job (and visas to go with it) and banks on the fact that many parts of Europe are losing population rather quickly.

View on HN

Tokyo is pretty famous for building something like 'enough'.

Vienna has a pretty good housing story.

The interest rates in most of the world are bad for would-be homebuyers across the board, though.

The US has a lot of 'low hanging fruit' in terms of being able to get rid of a lot of onerous zoning that could really make a dent in the housing supply. And we've seen a fair amount of progress in the short time frame that YIMBY groups have been a thing.

Interest rates in Japan are still very low, though if you're thinking about moving to Japan, it is difficult for foreigners to get mortgages through Japanese banks unless they have permanent residency or have a Japanese spouse, though I've heard of some banks offering mortgages to those who lived in the country for at least two years. Who knows what interest rates in Japan will be in two years, though; the yen has weakened noticeably against the dollar since 2022 when the Federal Reserve started its interest rate hikes, yet the Bank of Japan has continued its low interest policy.

Japanese property is famously cheap for being small, but other factor is land being a 30 year lease. Build same size + on land you buy and it will be more expensive despite efficiencies of large domestic market.

> Tokyo is pretty famous for building something like 'enough'.

Tokyo builds a lot because they tear down homes after 30-40 years to rebuild them. You can't judge Tokyo's property market by new housing starts, and the fact that housing depreciates (rather than appreciates) scares away all the speculators.

Wait what? There's a lot there, tell us more. Why do they rebuild every 30 years?

https://web.archive.org/web/20230917073306/https://www.nytim...

In Japan, the real estate system is designed to ensure affordability of homes.

In Australia, the real estate system is designed to encourage and maximise real estate investment as a no-effort wealth multiplier for (literal) rent-seekers. See for example the policy of "negative gearing" where the tax system subsidises those buying investment properties. Those that took advantage are such a powerful block that no politician of any stripe has the gumption to sunset this policy.

That’s only true after Japan’s massive property bubble crashed. Before that housing was as unaffordable as it currently is in China.

https://japanpropertycentral.com/2014/02/understanding-the-l....

See the link I posted. The average age for a house before rebuild is 27 years old.

CA is losing population too and building houses in those desirable locations. Why don't prices go down? These are financialized assets bought on credit. Some 8-10% of SF rental and 2% of owned housing is vacant (over 25% of commercial), but you don't see prices go down. Building 1% per year would involve a project on every single residential city block. That would have huge externalities. Why should current residents deal with the mess so more people can move in? So builders can get rich charging $1000/sqft?

The quick way to lower prices would be to annually tax vacancies (if you can't show a CA resident/corp paying rental income on a residential/commercial property) then pay the sales tax income the city would have received from those in an occupied location. This would encourage people to lower rents/prices to fill vacancies. Prop13 has made the property taxable rate so low that many people would rather have an empty rotting hulk than an occupied older property since it would lower their leverage on asset appreciation. A residence tax wouldn't be limited to the Prop13 assessment (5-10% of current value).

If there is ever a bubble pop, prices would likely to stay low for a generation. Just like Japan. It's not that different from bitcoin/NFT (other than some people live in them).

California's property bubble did pop in the late 80s/early 90s (ironically, or maybe related to, Japan's bubble pop). It recovered since then. Most people leave California because "it's too crowded, no one goes there anymore" (leading to high housing costs) problems, not because of other reasons. Eventually an equilibrium will be reached, and prices shouldn't drastically pop unless something else happens (like a tech sector crash).

People aren't leaving California because it's "too crowded". They're leaving because it's unaffordable (extremely high housing cost, high taxes)

Isn’t that how too much demand for limited supply works? Taxes aren’t that high in California, they are higher than average but that’s it. In fact, given that taxation is extremely progressive, you can wind up paying less in taxes in CA then states like Alabama (where taxation is very regressive) if you don’t make a lot of money.

> Prop13 has made the property taxable rate so low that many people would rather have an empty rotting hulk

Doesn't prop13 only apply to primary residence?

No, it insanely applies to commercial properties as well.

So you can sell the LLC that "owns" the property and maintain the low tax assessment.

The Tokyo metro area is quite affordable compared to desirable metro areas in the United States and Canada, as well as other East Asian metro areas outside Japan. While I'd struggle to find a place for $500,000 in Silicon Valley, $500,000 in the Tokyo metro area could buy a nice place, especially if one commutes from the suburbs. The public transportation system in the Tokyo metro area is top notch, even in the suburbs.

A deflated housing bubble in the 90s and (relatively) lower salaries is also a reason in Tokyo.

The median household income in the Bay Area is $128,000 [0] versus around $50-60,000 in Japan [1], with median house priced at $1.3m and ~$300k respectively.

Both are pretty unaffordable for people earning normal salaries.

The median in NSW (where Sydney is located) is around AUD$62,000 [2] but the median house go for AUD$1.3m [2]

[0] - https://www.census.gov/quickfacts/fact/table/sanfranciscocou...

[1] - https://www.stat.go.jp/english/data/kakei/156.html

[2] - https://www.abs.gov.au/statistics/labour/earnings-and-workin...

[3] - https://www.ratecity.com.au/home-loans/mortgage-news/median-...

[4] - https://www.forbes.com/advisor/mortgages/real-estate/bay-are...

[5] - https://www.nippon.com/en/japan-data/h01311/

That is definitely true. I currently live in a one-bedroom apartment near Silicon Valley; I can't afford to buy a house anywhere near the Bay Area unless I wanted to commute from Stockton, which has a very high crime rate. Conversely, I could afford a really nice place in Tokyo with my Silicon Valley income, but if I transferred to my company's Tokyo branch and took a local salary, my salary would go down substantially. Even so, I'd still be able to afford a home in a suburb of Tokyo (even $250,000 can get you a place out there).

As someone who travels to Japan frequently, my dream is to own a vacation home there. Outside of Tokyo homes can be even cheaper; I've seen listings in rural parts of Japan for places as low as $40,000!

> As someone who travels to Japan frequently, my dream is to own a vacation home there. Outside of Tokyo homes can be even cheaper; I've seen listings in rural parts of Japan for places as low as $40,000!

There are lots of conditions to that, including high property tax, requirements to farm, strict permanent residency requirements. I don't think many rural communities want to become desolate vacation home places, and they've surely thought of that when regulating their property markets.

> I currently live in a one-bedroom apartment near Silicon Valley; I can't afford to buy a house anywhere near the Bay Area unless I wanted to commute from Stockton

I mean, you are going to have to get a mortgage to buy a house no matter which country you live in. A mortgage of $4-5k/month can still be doable assuming you saved enough for a down payment, though the lack of houses being sold makes it much more difficult to buy. That said, it's a similar story in every city I've been to - London, Boston, Saigon, HK, Delhi, Shanghai, Tel Aviv, etc.

Prices are lower, but managing, buying, and owning property is difficult if you aren't a Japanese national.

A lot of those cheap rural houses are in their versions of WV or Idaho, where you can still find houses for a similar price.

> Even so, I'd still be able to afford a home in a suburb of Tokyo

To be fair, anything that isn't Central Tokyo is the Japanese equivalent of Stockton socially.

You can’t compare Tokyo and Bay Area mortgages this way as interests rates in Japan are still remarkably low and citizens of Japan are able to obtain favorable term, zero money down mortgages fairly easily (assuming they’re salaried workers). Nothing like this is available in the US. Likewise, rental costs in Tokyo are far cheaper than the Bay Area and Tokyo has stronger renter protections. From the perspective of housing (and myriad other things, like public transit), it’s much better to be a median income worker in Tokyo than the Bay.

Australia, however, is it’s own special variety of fucked.

> desirable city

Sydney has topped net internal migration for years now. It's desirable for everyone who doesn't live there, actual locals are getting out at a ridiculously high rate.

Chicago? Prices don't seem to be going up.

Reply on news.ycombinator.com