Property prices thread

[Tonitrus]

A lot of the "Bay Area Flight" has actually been people moving from The City (San Francisco) to other parts of the Greater Bay Area.  Sadly, that includes Santa Cruz which was already in a huge upward spiral of prices.  People are buying houses unseen, in one case in Berkeley a house sold for a million more than offered because of bidding wars.

My cardboard shack under the interstate is looking sweeter by the day.

My current, prospective property search is the Monterey area, so I feel that pain.   

$500,000 for 4-500 sq/ft 1-bedroom condo without its own washer-dryer hookup?  NOTHXBYE

The more livable places are near $700K

The rental market is not much (i.e. at all) better.

I'm not sure my income would make me eligible for a mortgage at either of those levels.

[Sheilbh]

So just how big are these £500,000 castles you can buy near London? Do they have their own drawbridges and moats?

Did a quick search for one on Zoopla and it looks like it gets you a 3-4 bed house either semi detached or detached

Apparently there was a big drop here in the 90s.

Black Wednesday when we crashed out or ERM - back then we had far higher interest rates (about 10%) and inflation than most of the rest of Europe. There was a raid on Sterling and to try and protect the currency and stay in ERM the Chancellor (this was before the BofE set rates) increased interest rates twice in one day to 15% before they decided to let the value of Sterling fall below the ERM bands and the UK to crash out of Sterling.

But overall from the late 80s to Black Wednesday house prices fell by over 20% and there were lots of people in negative equity, plus interest rates were at 10% for most of the period. Black Wednesday was the nadir.

I'm not sure we're in that sort of situation again for many reasons.

I was reading couple of weeks ago that the government's new scheme of 5% deposit support (where the government guarantees such loans with the nominal reason of helping first buyers) will not (yet) be used for actual flats by the banks, as they are deemed too much risk with the furlough scheme ending and economic outlooks too uncertain. The article (Guardian) claimed it was this 90s crash that lives in the banks' memory.

oh no

[Tamas]

oh no

It's a subsidy intended for investors, not for the likes of you, mister, no matter what the PR line said!

[Malthus]

Here in Toronto, the story for as long as I can remember it is that (a) we are in a property bubble; and (b) it is just about to pop - or maybe it already has!

I have read many, many articles along these lines, and many of them advance serious and apparently irrefutable economic arguments as to why this is so. Somehow, it has escaped the notice of these learned authors that exactly the same theories and predictions have been advanced for at least twenty years, yet the promised bubble bursting has not, in fact, happened.

It seems to me like no one has a freaking clue as to why property prices have not "burst", or can make a prediction that is worth anything. I assume that property prices will, in fact, at some point go down, because all markets are cyclical, but I am convinced no-one has any real idea of when or why they haven't already.

The analogy I use for such economic analysts is that they are like doctors who, no matter what the patient's condition, always tell the patient "you are going to die". I mean, it is always true, but it is somewhat important to know when ...

[Barrister]

So there have been housing crashes in Alberta in the early 80s, and then again in the early 90s.  These days housing prices have been quite stagnant for maybe the last 10 years.  I could pretty much sell my house for the price I bought it at 10 years ago.  Now part of that is just depreciation (my house, and the neighbourhood, is 10 years older), but mostly it's just a flat housing market.

That all tracks very closely with the price of oil though, so I don't think it's particularly relevant to anywhere else.

[PDH]

My current, prospective property search is the Monterey area, so I feel that pain.   

$500,000 for 4-500 sq/ft 1-bedroom condo without its own washer-dryer hookup?  NOTHXBYE

The more livable places are near $700K

The rental market is not much (i.e. at all) better.

I'm not sure my income would make me eligible for a mortgage at either of those levels.

The cheapest condo with 2 bedrooms I have seen in Santa Cruz (recently) was about 600k.  A mobile home in a trailer park manufactured house in shared-living lot can run as cheap as 400k if you don't mind that it was a meth house before...kinda joking.

Up until the pandemic Monterey was a bit better than here, but for some reason even more people are fleeing Silicon Valley to go there.

[Sheilbh]

Yeah house prices here have broadly been rising since 1992 (minor dip in 2008, plateau in 2016). I am not convinced there's any value in waiting for the bubble to burst.

Plus I do think there's a really obviousl reason why house prices are rising in the UK: the numbers of properties we build is lower than population growth.

[Valmy]

Yeah I kind of admire the war on normal people the UK is waging with its anemic building of housing. Pretty soon everybody will be a peasant again providing services for powerful landlords.

[Richard Hakluyt]

That is why I'm not really a believer in the North-South divide; at least houses are affordable here.

[Sheilbh]

That is why I'm not really a believer in the North-South divide; at least houses are affordable here.

I'm always obsessed with that chart that shows average net incomes in London and the North are basically the same if you include property costs.

Yeah I kind of admire the war on normal people the UK is waging with its anemic building of housing. Pretty soon everybody will be a peasant again providing services for powerful landlords.

Most people own a property so they benefit from prices going up.

[Barrister]

Most people own a property so they benefit from prices going up.

YOu don't really benefit from housing prices going up though - you have to live somewhere.  It's not like you can cash out of your house.

[Tamas]

Most people own a property so they benefit from prices going up.

YOu don't really benefit from housing prices going up though - you have to live somewhere.  It's not like you can cash out of your house.

Psst don't ruin all those people's fun.

[Sheilbh]

Most people own a property so they benefit from prices going up.

YOu don't really benefit from housing prices going up though - you have to live somewhere.  It's not like you can cash out of your house.

Re-mortgaging/access to more credit, a big return when you down-size once the kids move out, something to pass on to the kids.

[Josquius]

Most people own a property so they benefit from prices going up.

YOu don't really benefit from housing prices going up though - you have to live somewhere.  It's not like you can cash out of your house.

Re-mortgaging/access to more credit, a big return when you down-size once the kids move out, something to pass on to the kids.

Yes. This is a big one.
My dad is doing some work at the moment for a Cornish woman who just moved up here to be near her son who married a Geordie. She bought a really nice bungalow in the countryside for £100k or there abouts having sold her family home in Cornwall for 4 times that.

That is why I'm not really a believer in the North-South divide; at least houses are affordable here.

Ish.
If you've a half decent job they are.
But half decent jobs are harder to come by in the first place, as is getting onto the path that can lead to them.
I think things are less awful than they were a decade ago but in many fields there's really little option but to have to go to London.

Also things change once you are on the property ladder. £50k vs £25k a year matters little when rent is £2000 vs £500 a month. But when your housing is covered its fine. Even if the mortgage payments are more thats not money that is disappearing into space barring a housing crash, its still yours (which explains why the government has no interest in bringing down housing prices).


Really its something that could be an interesting data representation experiment, the relationship between access to jobs and property prices. Its quite interesting to track just how much property prices shift as towns become somewhat more accessible, get a train station, etc... hmm.



At risk of pissing off some folks, rest assured I don't mean you here. Just thinking to some conversations I've had...
I have to say there is quite an entitled attitude amongst a lot of people who are priced out of London property ownership. They expect an awesome two bed flat in a trendy part of town, but not too noisy, walking distance from all the cool bars... at sub £200k or whatever it is.
Moving out of London and getting a job elsewhere? Why no. I can't do that. I like living here. I can't move to the badlands. Its uncool.
Moving out to a cheaper part of the London area? 90 minute commutes every day? No thanks.
So they continue to live in a garden shed, paying £2000 a month to cover the big house owner's mortgage.

For born and raised Londoners for generation upon generation I feel sorry for them. For teachers, doctors, etc... I have huge sympathy and really want something to be done. But there's an awful lot of people who just can't compromise in their life. There's little attempt to think of the big picture.

[Valmy]

Most people own a property so they benefit from prices going up.

YOu don't really benefit from housing prices going up though - you have to live somewhere.  It's not like you can cash out of your house.

Re-mortgaging/access to more credit, a big return when you down-size once the kids move out, something to pass on to the kids.

But higher taxes and so long as no member of your family ever wants to have kids again you can get a big return