Why Ireland's housing bubble burst(worksinprogress.co) |
Why Ireland's housing bubble burst(worksinprogress.co) |
Anything else wildly perverts monetary policies. The mortgage market is suddenly the real bond market, there's extreme moral hazard, there are either explicit mortgage market safety nets or quasi-nationalized mortgage providers, etc. It becomes a weird monetary policy slush fund that is incidentally also where people live.
For example Berlin's population only started growing in the 2010's (it's was stable or declining since the 1990's) and prices have been growing quite rapidly lately so arguably it just a few years (or decades) behind other major European cities. Munich on the other hand is almost as expensive as Paris.
Edit: oh I get it, his point is that yes there was a bubble, and that's why prices went up. Without extra supply it would have been worse. I think that's putting the horse before the cart, because without the bubble the extra supply wouldn't have been built.
This post is all over the place.
In fact - places like Ireland are shockingly rare exceptions where supply actually went up with demand.
That's why this article is interesting.
The topic is apparently his phd thesis.
Though bubbles are a bad analogy: actual bubbles burst, economic bubbles deflate - not because of a puncture, but because they were continuously filled with air from a source that at some point can't provide it anymore.
Don't they burst because the source doesn't stop before the bubble gets larger than what it can be? The source stopping would just lead to a deflation where it slowly gets smaller if the air hole is still open, or remain the same size until tiny leaks make it not be the same size anymore.
To continue my analogy, I prefer to visualize them as flying uncontrollably while shrinking very quickly (but not immediately as a puncture would), propelled by their own deflation discharges...
So, this kind of thing: https://www.youtube.com/watch?v=6CTnTi1Lq60
Is it cheap capital? Fraudulent bank practices? Or is it because people wanted more space during lockdowns while having the sense of financial stability?
If the demand increased while supply stayed constant, the price increase is not a bubble. I waited for "the bubble to burst" for years before realizing there likely is no bubble where I am from. Housing's just expensive.
So, prices doubled in the years from 2000 to 2012 - a little under 5% yearly growth. Is that really a crash? Or am I misunderstanding "quadrupled then halved"?
Has price index since 2005, but not before.
For all residential properties it was
2005-01: 125
2007-07: 163 (peak)
2013-03: 73 (trough)
2021-11: 155 (latest)
Even just looking at Dublin houses (where people want to live due to centralisation of economic activity), it follows the same pattern
2005-01: 112
2007-04: 155 (peak)
2012-04: 65 (trough)
2021-11: 141 (latest)
> So, prices doubled in the years from 2000 to 2012 - a little under 5% yearly growth. Is that really a crash?
2008 was still a stock market crash, even if the average growth from 2000 to today is very good
At every major decision point there were intelligent people screaming in the ear of media and politicians that property developers were getting away with murder.
I knew teenagers who emigrated as the writing was so clearly on the wall, and the entire time our print and TV media were inflating the bubble with every tool at their disposal.
Trails of brown envelopes (bribes) have been sniffed out repeatedly, and then left to grow cold. Large scale developments were made and begun without any plan whatsoever to connect them to basic and necessary infrastructure such as sewage, or schools.
The media have pointed fingers at immigrants, dole scroungers, and market forces - anything but policy. They give airtime to politicians who have been repeatedly proven to be actively working against us and caught in lies over and over. They smear anyone speaking truth.
And when it all went tits up the same fuckers - property developers and politicians and media - made even more money. For example, with NAMA, which this author inexplicably ignores completely.
Irish housing policy for the last decade has been to sell property to vulture funds and foreign investors at firesale prices tax free, while the average Irish worker has none of the same advantages and no chance of getting on the ladder whatsoever.
Our Minister of State for Housing recently tried to get his monkeys to find flaws in an ESRI report saying we could borrow billions for social housing. Our Minister for Housing has come through with just 5% of his promised build number. THIS IS POLICY.
Our government funds landlords with schemes such as HAP (1.5 billion euro directly to landlords since 2017) instead of building fucking houses. They then use those schemes to twist the numbers, pissing in our face and telling us its raining despite clear record homelessness and child poverty.
We give foreign companies billions to build houses which we then rent off of them for decades and don't own at the end. It's sheer, clear insanity. And this Oxford chap seems completely unaware, yet wholly confident in his "understanding" of the issues we have.
This crisis was NOT built on misunderstandings, or myth, or innocent mistakes and apathy. It was CONSTRUCTED. And at every point, the wrong people have profited at the expense of the 40% of Irish who don't own a house.
And if I'm not wrong, neoliberals and banks are running this scam all over the world.
Prosperity, low-interest rates, wider mortgage product offerings, and easy to access credit cause pricing bubbles.
Now, forces that make a housing bubble pop include a downturn in the economy, a rise in interest rates, as well as a drop in demand.
We've had all that and credit is getting more expensive.
Theres only so many people who can live somewhere or buy to rent scheme spaces, developers building as much and fast they can and you can't renew all the older buildings.
In the end, follow the money, all the stake holders and you'll find it is always universal greed at the root.
I am not so sure that building houses for non business purposes should be handled so liberally.
As we saw in 2008/2009, financial markets are linked more so than they tell you. Diversifying your portfolio is a good idea, but having both real estate and stock investments is probably not in fact diversifying.
How far are we from the boomer generation leaving the market (one way or another)? This will create a lot of oversupply and negative pressure on prices I would assume - who will buy all their houses in the country, their share in the stock market? The answer to that is that we've been doing that already in the past decade with all the money printing / inflation / devaluation of wealth... not sure where the train stops and who will be left holding the bags.
The juice was squeezed over the last 40-50 years, and those times aren’t happening again [1].
[1] https://ourworldindata.org/uploads/2013/05/Updated-World-Pop...
You are describing hyperinflation. Everything is up, except for salaries. There are two options:
A) accept the prices as real, embrace the inflation, and raise salaries
B) crash the markets and real estate, kill all the crypto-scam economy, keep jobs running with government money
Some kind of mix of both will happen. I doubt that salaries can continue this low when basic needs cannot be covered. And I doubt that it's possible to just rub off so much inflation, some things need to go down. So, we can meet in the middle.
Inflation. Food, bills, gas, etc.
> How far are we from the boomer generation leaving the market (one way or another)?
20-30 years, during which time the younger generations will be entering. They are smaller slightly but most countries have immigration which keeps them fairly neutral.
> The answer to that is that we've been doing that already in the past decade with all the money printing / inflation / devaluation of wealth
This is not quite correct. Printing money does create inflation. Cross sector inflation does lead to devaluation of liquidity, but wealth includes more than cash on hand.
While Canada as a whole has recently seen some small increases to the cost of housing on the back of increasing lumber and labour costs, the country has a whole has remained largely stagnant, even falling in some cases. The gigantic gains seen, which bring up the country average, are limited to the prime agricultural areas, namely Toronto and Vancouver, where farmers are now willing to pay more than developers for undeveloped land. Something that is historically unusual.
>The gigantic gains seen, which bring up the country average, are limited to the prime agricultural areas, namely Toronto and Vancouver, where farmers are now willing to pay more than developers for undeveloped land. Something that is historically unusual.
Why is farmland in those areas so sought after? Were canadian farmland historically underpriced? Is the land just really good farmland? Are speculators buying it because of global warming?
Kelowna? Calgary? Halifax? Are those places being driven up by farmland demand?
If not, the injury is self inflicted.
Welcome to Europe :)
The bond buying programs of the ECB are pretty expensive already, and the Green New Deal will be mostly implemented on credit. And Europe is already quite deep in debt. So is the USA, but the USA can at least derive some strength from the dollar being the world reserve currency, with no clear challenger in view.
Well yeah people wanted more space and had more money to spend - of course prices went up. Not sure why you've said 'even'?
Interest rates fell dramatically, government stimulus/cash transfers were far in excess of any lost wages, fewer people wanted to list houses and do showings due to covid.
Certainly a perfect storm.
You just described every bubble. The whole point of bubbles is that you can't predict when they'll pop.
Rental houses are an asset class now, and that’s unlikely to change while the rich can get richer renting to people who can’t afford to buy.
- academic, like the author. Look for the facts and numbers and derive your understanding of the events from it, and only it.
- investigative, like the events of Spotlight. Pull on a thread and see how deep it goes.
You need bit of both to discover the whole truth.
Most of property costs can be tied to government policy, re: zoning, interest rates, tax laws etc.
The government is usually always the one that could fix the problem by encouraging building. E.g. in the US we have an 18% tariff on Canadian lumber, which artificially increases cost to build (though is meant to protect domestic lumber industry).
Many municipalities have zoning laws that prevent densification etc.
Government could easily require investors to put more money down in residential (New Zealand just did this), increase tax on non owner occupied, upzone to allow more dense homes/building, office to residential conversions, etc.
Remember how I talked about housing estates being built where there was no desire or infrastructure there? They did this by taking advantage of human psychology. When people turned out against a development, they'd simply resubmit the proposal in 6 months or a year and this time people would be fatigued and not fight it. I have personally heard them talk about doing this with my own ears. They made backhanders to politicians, they paid off newspapers and TV stations, they made deals with substandard suppliers.
And why did they do this? There was huge money in it. Government funds, aforesaid substandard materials, treating workers like shit. Ever way the system could be gamed it was gamed; and they didn't even try all that hard to hide it.
Look up CRH, Ireland's concrete cartel. Look up mica blocks in Donegal. Look up NAMA corruption. There's more than enough information out there to put all the pieces together but media and Gardai refuse to do so. Half the population is aware of how fucked all this is and it remains an open secret; so seeing revisionist wank coming out of Oxford academia is actually offensive.
... So, developers got paid. Media got paid. Establishment politicians got paid. Banks got paid repeatedly, as did their bondholders. Everyone got paid except for the people, who were and are being cynically and systematically fleeced before, during and after each boom bust cycle.
The easiest answer is that property developers are ultimately responsible for policies in legal and not exactly legal ways.
Can't argue with this, in fairness.
> The media have pointed fingers at immigrants, dole scroungers, and market forces - anything but policy. They give airtime to politicians who have been repeatedly proven to be actively working against us and caught in lies over and over. They smear anyone speaking truth.
This is just not true. It's almost libellous it's so wide of the mark. I don't know where you're getting this from. Nobody of any substance has ever blamed the crash or the housing crisis on immigrants, people on the dole, direct provision or anything like that. Immigration in particular has been an absolute non-issue the entire time.
> Irish housing policy for the last decade has been to sell property to vulture funds and foreign investors at firesale prices tax free, while the average Irish worker has none of the same advantages and no chance of getting on the ladder whatsoever.
This is not true either. Vulture funds buy non-performing loans (not property, loans), of which there are many, and for which reason we have higher than average mortgage rates. It's distasteful, but without them our current account fees and loan rates would be higher than they already are.
REITs are not vulture funds. They generally build to rent: they finance the construction, and then collect the rent. Without them there would be thousands fewer apartments in Dublin in particular. Cork city went a full decade without a single apartment complex being built. They serve a purpose. They don't pay corporation tax, but they do pay tax. See here: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-c...
The funds swooping in post-construction and buying entire blocks of houses or apartments that would otherwise have gone on the open market, they're a different story. They can die screaming.
> Our government funds landlords with schemes such as HAP (1.5 billion euro directly to landlords since 2017) instead of building fucking houses. They then use those schemes to twist the numbers, pissing in our face and telling us its raining despite clear record homelessness and child poverty. We give foreign companies billions to build houses which we then rent off of them for decades and don't own at the end. It's sheer, clear insanity. And this Oxford chap seems completely unaware, yet wholly confident in his "understanding" of the issues we have.
HAP is a bad scheme. Totally agree. The "Oxford Chap" is a Trinity academic who writes the daft.ie reports on housing in Ireland. He knows what's going on as well as you do.
> This crisis was NOT built on misunderstandings, or myth, or innocent mistakes and apathy. It was CONSTRUCTED. And at every point, the wrong people have profited at the expense of the 40% of Irish who don't own a house.
Nobody manufactured the crisis on purpose. That's tinfoil hattery.
https://www.bloomberg.com/news/articles/2012-07-19/ireland-b...
Also, the author claims that he couldn't find empty estates near Dublin, but if he went as far as Celbridge he would have found some. Futhermore he seems to jump back and forth between rural Leitrim and Dublin to make his point, depending on what suits his argument. Rural areas had huge ghost estates.
https://www.housing.eolasmagazine.ie/cso-publishes-breakdown...
You can see a comment below from mandmandam below with a personal take too.
The point about there being a credit bubble stands, and the author leaves out the commercial side of the bubble, purely focusing on residential.
The wikipedia article is superior to this one, normally I would have more time and respect for Ronan Lyons than this linked instance: https://en.wikipedia.org/wiki/Irish_property_bubble
And as to there being a myth about the Irish property bubble refuting the laws of supply and demand, I don't think anyone has made this point in my earshot or viewing. This third myth is itself a myth of the author's own creation.
Ronan Lyons is a fairly well known name for people who would read the Business section of the newspapers. He compiles a a quarterly report for Ireland's largest property website that gets pretty much guaranteed coverage upon release.
Since the terms "transport", "landlord" and "highest mortgage interest rates in the eurozone" appear nowhere, I believe the article is a relatively shallow analysis, though some good points are made. This is probably the most important assertion, to my mind:
Put another way, nobody worried about the cost of building a home rising from
€125,000 to €225,000 when credit had pushed prices up from €150,000 to €350,000.
But when prices crashed back down to €175,000, the system had a real problem on
its hands – one that policymakers have been loath to touch.
Small scale private landlords are exiting the market, there's general unease with large scale commercial operations (a novelty here) given tight supply and not so ancient Irish history. A particular issue in Dublin city is the scale of privatised student accommodation to avail of various tax reliefs (recently some 18k units, in over 50 individual developments).
I have a reluctance to take on personal debt, I was able to save and needed only a small mortgage for a house in Dublin city (and more importantly, within cycling distance of work). I consider myself one of the lucky ones. My mortgage repayments are approximately my previous rent, I rented for more years than my mortgage term (but ability to move according to work was my preference for a long time).
It's no small irony that the house I live in was built in the 1950s, local authority housing designed by Dublin corporation architect HG Simms - back in the original Dublin housing crisis ...
https://www.irishtimes.com/culture/art-and-design/hugh-lineh...
The two options you describe sound to me like they're only viable in a very centrally planned economy, and are fairly independent of general inflation. You can't really deliberately move prices like that unless you're willing to interfere in markets to the extent that, say, the Chinese government does.
Stock markets will do their own thing. The price of a share of a given company will go up and down based on ever-changing estimates of future earnings of that company.
Real estate demand is fairly inelastic, so prices there won't really go down unless you either massively increase supply (staring down NIMBYs and keeping costs under control - challenging on both counts), or decrease demand (somehow make huge numbers of people move to places with less pressure on housing, kill people's earning and saving potential, convince huge numbers of people to move back in with their parents and/or houseshare with others - also challenging on all counts).
At least in something.
The pato-developer thing comes from the fact that many of these new apartment complexes often make huge compromises on quality or amenities. A common complaint is very thin walls or apartments with windows facing a few meters from neighbors. Search in youtube for pato developer and you will see some really comical videos.
It is very not ideal, but even so it provides a huge pressure relief on housing demand and kind of allows young people the ability to afford something to start a family. Real estate is even so often used as an investment but I think with the current interest rate hikes the crazy valuations on the main cities will come down.
Further, the way into these sectors is to buy what we call quota. Dairy farmers in Ontario imposed a price cap on quota back in 2006 in an effort to make it accessible to young farmers. While the fair market value of quota has likely doubled in the meantime, the maximum price you can pay is what it was in 2006. This means that there is even more cash floating around, that historically would have been tied up in quota purchases, in which to buy farmland with.
2. Increased profitability in agriculture in general. The US ethanol subsidy program of 2007 set the stage for significant increases in the price of field crops. As that program winded down and prices were coming back down, the US midwest got hit with three major weather events over the intervening years that decimated their crops, boosting prices again for those who had one. Not to mention that the US Farm Bill has been modified over the years to be more favourable to foreign countries like Canada.
It's interesting because back in the 2000's that was the main talk about how Urban Sprawl was going to ruin everything!
But like, I don't need them. Almost no one does. It's an aesthetic lifestyle choice. I'm (probably, anyway) willing to purchase a home in order to do this--and other non-apartment-friendly things--but I don't think it should be the goal of national housing policy to ensure that everyone has this option.
I can also imagine a more sophisticated tenant/landlord/housing policy that allowed tenants to do more significant things to land or structure. It's not like these things are unprecedented: leasers of agricultural land and commercial office space do it all the time. But again, I think it probably boils down to "poor, unsophisticated people rent, letting them lease your property is a huge risk, here's a thick contract and some biased tenant/landlord statues to protect landlord interests" thinking, which is definitely inaccurate.
Thus, BigCorpFood has to manage price (too expensive and less consumers buy their products) and cost (too much cost means no profit).
BigCorpFood would really like to sell you a hundred frozen burritos at $0.99 that cost them $0.09. That would be ideal.
Less ideal but realistic would be selling you frozen burritos at $2.99 that cost $2.79
Even less ideal - but still workable for short periods of time - is selling you burritos for $2.99 that cost $3.10
What BigCorpFood doesn't want is to sell you frozen burritos at $9.99 that cost $9.79. That is really bad for them. They will sell very few of those burritos, and make almost no profit.
BigCorpFood stock price is more about introducing "New Deluxe Spicy Chicken Burrito, available for $3.10!" that cost $2.75. If eg Beef is getting more expensive and BigCorp can sell you cheaper chicken thigh and save a profit margin, that will help their stock a whole bunch.
ps: Oh, and re "your food/gas prices go into the income statement..".No, they go into the revenue statement. Income = Revenue - Cost.
Also: sales is recorded on the income statement, no-one claimed that sales = income.
I don't have figures for the amount of bulldozing that went on, but it was enough to make headlines for the years between 2008 to 2012, the bottom of the market.
I spend a lot of time in rural Ireland (ok, in the eastern, wealthier, part). This figure doesn't really reflect what I see on the ground, which is scarcity of supply - you got sources for that figure, preferably with a breakdown by region?
In any case here's the link I was looking for earlier, which should source the breakdown you are looking for.
https://www.cso.ie/en/releasesandpublications/ep/p-cp1hii/cp...
You won't find many empty 3-bed semis with a BER above F outside of urban areas. I still think he was broadly right about the ghost estates nationwide.
Even if we can’t defer those problems forever, we can slow down the transition, making it less painful than the one experienced by Japan.
Japan is trying to increase its immigration for the same reasons I mentioned, and they're struggling for the reasons you mentioned. Only 2% of their population is foreign born[1], which is up from past figures, but still a drop in the bucket compared to the US system.
You're totally right that there's going to be political and cultural issues over immigration, there always is. But America has the political and social institutions necessary to maintain a high level of immigration over long periods of time, which can help damped the blow of fertility change even if it's insufficient to fully reverse the trend.
0 - https://www.pewresearch.org/fact-tank/2020/08/20/key-finding...
1 - https://www.oecd-ilibrary.org/sites/e025d47d-en/index.html?i...
People lobby for different things all the time, it's the government that sets the rules. The only power public has is to vote out those officials, or lobby the other way.
There were structural, government induced factors that helped lead to the 2008 GFC in the US too. You could blame irresponsible buyers, or the banks, but it's the government regulation that is the only thing that can structurally fix problems. Blaming actors within the system devised by govt doesn't solve anything, however cathartic it may feel.
Because responsibility comes with power. Developers are hugely wealthy and have incredible lobbying/bribing power and they are happy to use it.
They know very well that "lobbying" and creating housing bubbles is not a victimless crime and they do it anyways.
Politicians still get blame for accepting bribes but they are not billionaires themselves and it's understandably not easy to push back.
In case you're actually reachable though - just because a government fails to stand up for its people does not excuse the complicit parties who "lobby" them to fleece normal people by the millions.
The government is the one that sets policies, not the developers. To me a government official that accepts a bribe and makes far reaching policies in response to one is much more culpable and to blame than somebody making the bribe.
It's like if a company hired a lot of unqualified people and then blamed those people when it failed, rather than their system of checks and balances in the hiring process.
Focusing on the player and not on the rules of the game is simply a losing mentality, sorry.
The whole point of democracy is about holding government accountable when they make mistakes. Diverting blame to non government actors doesn't solve anything
The corruption was a little more subtle in those days (although I look forward to the coming NANA tribunal).
For rich and sophisticated renters there is always an option to pay the landlord to do whatever modifications they want.
To get back to your point...
> there were also completed and empty housing estates.... Rural areas had huge ghost estates
That's not accurate - an ambitious housing estate in a rural area would be usually a few tens of houses. Ten to fifteen would be much more usual. "Huge" is not the word.
> You will find that you are wrong about the occupation rates in rural areas, it's still at around 180000 unoccupied dwellings at the last count. Misleading not to make the distinction between Unfinished and Empty just to make a point, leaving out half the story in numbers terms.
The CSO figures don't allow us to see what proportion of the unoccupied buildings are ghost estates. Table 4.3 gives a breakdown but it's not particularly helpful. From my own experience I really don't think that they are a particularly large proportion any more.
compare and contrast
https://www.meathchronicle.ie/2021/05/15/meaths-last-ghost-e...
https://www.con-telegraph.ie/2021/07/20/urgent-call-to-tackl...
we are now into an argument of semantics over huge.
Also I would like to point out the title of the myth was about 'Ireland built too many houses', not just ghost estates and so the distinction between unfinished and empty remains important and ignored by the author.
In addition the author refers initially to them as 'ghost towns' which is not common parlance, and then links to an article about 'ghost estates', and continues then to talk about 'ghost estates'.
Linked from the original article. https://www.bbc.com/news/world-europe-35112926.amp
But all that aside, I'm not really talking about housing prices. I'm talking about the boom and bust cycles.
You <<want>> that house, notice the difference?
I grew up in a very practically designed 2 bed room apartment of about 90sqm. It was more than adequate and to preempt comments, it wasn't "inhumane" or a "slum" or whatever. I'd live there today if Romania as a whole wouldn't have a lot of growing up to do.
A 100sqm apartment, made larger to account for modern sensibilities, is more than enough to raise 2 kids.
Even when global populations begin to fall, we can still keep immigration up. There's nothing at all inconsistent with falling populations and immigration. Economically there might be a lot of pressure for people in places with falling populations to emigrate, because of the economic effects of sudden population drops.
You're safe for at least 50 years.
It's not clear to some countries stick almost exclusively to fixed rate mortgages, and others stick almost exclusively to variable rates, but the people in "variable rate countries" have saved a lot of money historically.
Fixed rates are always a better option for the person borrowing the money as you can refinance if rates go lower, lowering your monthly payment.
Variable rate loans are far more regulated for a reason.
They slice up the loans and sell them as MBSes to the Fed and pension funds.
If interest rates go up ~1% - pension liabilities decrease ~12%: https://www.pentegra.com/wp-content/uploads/2016/12/The-Impa... This is not terrible for pension funds.
The Fed doesn't need bailed out...
What you can’t have is millions of bag holders underwater with mortgages on homes valuations cut in half.
I'm sure the central bank would step in to prevent the roughly 60% of homeowners/voters from being negatively affected.
Honestly I’m of the opinion we won’t see any serious rise in rates. Too many mortgage holders and indebted governments would be broken.
Just look at the last month. The Fed threatens a few hikes that would push a 10 year bond to 2.5-3% and the market crashes.
And the thing is, maybe it would be better to blow off some of that steam in small bursts than find our <<after>> that 2 days ago was the point of no return.
As a concrete example, bank account deposits in the UK rose 10% during COVID.
The markets are not invididuals, if we're talking about stock markets. And in Europe they don't represent most of the population as asset holders or anything like that.
Case in point for France:
"There was an 8.3% decrease in France’s economy in 2020, and the country has not seen a recession to this extent since World War II. For example, France’s travel and tourism sector’s contribution to the French economy decreased by 48.8% due to travel restrictions. As a result, that sector alone lost 193,000 jobs. (...) Before the pandemic, 9.3 million people lived below the 1,063-euros-per-month poverty line in France. Those who were poor had little opportunity to improve their lives, especially during the pandemic when unemployment rates reached a two-year high. As a result, retail workers, artisans and self-employed people were among those the pandemic most affected. Further, the number of French people in poverty has significantly increased to more than 1 million people during the pandemic. (...)"
>As a concrete example, bank account deposits in the UK rose 10% during COVID.
That's one disconnect. Most people don't have bank account deposits (or don't have any to write home about). That's apparently true for the US too...
https://www.cnbc.com/2019/01/23/most-americans-dont-have-the...
- though I guess those people don't go out buying houses either.
And the 200k people laid off from the tourism and other sectors were paid 80% of their previous income by the state.
As you say, people who aren't buying houses anyway not getting richer doesn't have any impact on the price of houses.
To be fair, if COVID happened anytime before broadband is available to homes, the analyses wouldn't miss. Novel pandemic, novel technologies, novel situations all around.
Public sector workers and corporate employees tended to fair well because they were 'working from home' and not paying a siginificant part of their income on getting to the office and back.
Factor in, also, much less properties available. I was looking for a house at the time and anything that came onto the market was getting snapped up in no time at all. This lack of supply soon translated into increasing asking prices.
If the guy who robbed your house and cleared out your bank account bribed the judge to go free, would you then feel that the robber played the system well?
Would you be arguing that he doesn’t need to go to jail, only the judge? Because "democracy"??
... I fucking doubt it.
And I imagine you'd feel even worse when you find out that the burglar and the judge have worked together to clear out entire neighborhoods.
So why excuse theft on a national (even international) scale?
In your example, it's like saying crime is systemically high, and thinking blaming the criminals will solve it. You can and should prosecute individual criminals, but it does nothing to solve the underlying reasons that crime is high.
High crime is likely due to structural factors that the government has control over, and you'll never solve high crime by jailing everybody. Jailing nobody would be a structural factor encouraging high crime, however. But one which the government can be held accountable for.
It's naive to expect to solve societal problems through "shoulds" and not through rules and legislation.
Well, there is sovereign default but if the US does that, then we'd better hold on tightly to our breeches, from Kamchatka to Patagonia.
The US Government defaulting wouldn't impact the Fed's ability to continue to buy infinite sums of assets.
There's no reason that the US Government couldn't default and the Fed buy absurd amounts of treasuries until interest rates remain low or go even lower.
Even a Romanian block of flats from the Ceausescu period would seem a luxury to the peasants of Vlad the Impaler.
But we are talking about Germany, Munich. This is one of the most advanced economies in the world, and a great power of export. Having a 160sqm house with a 800sqm garden shouldn't be out of reach of a regular engineer working there. Plenty of people were able to buy similar properties just 30-40 years ago, in Munich, Prague or Copenhagen. Something is seriously askew if a normal middle class in a rich country can no longer do that.
Especially the 800sqm garden.
A small terraced house with a 200sqm garden, maybe. But 800sqm is extreme for anything above a sleepy town. Maybe in a bad neighborhood or a suburb reasonably far away from the actual city.
But in the city? In ~1000sqm you could build an entire apartment building that could house 60+ people.
> Something is seriously askew if a normal middle class in a rich country can no longer do that.
No, it's a correction the other way. The post war boom that lasted until about 1995 is over for good. Especially with the competition from all over the world, not just from the small Western sphere.
Edit:
Oh, and this is super arrogant:
> Even a Romanian block of flats from the Ceausescu period would seem a luxury to the peasants of Vlad the Impaler.
If you sneer at Communist apartment buildings, a decent Romanian block of flats built in 2022 is basically at Western standards from every aspect you can imagine (example: https://www.skia.ro/en/one-cotroceni-park/). And I stand by my point that you can raise a perfectly happy and functional family with 2 kids in a 100sqm apartment. If anything, that house with a large yard is more of a luxury.
Meanwhile buildings built around 1900 are in better order, because the quality of work was a bit higher back then.
You can raise a decent family in a flat, but things like a constantly leaking roof, gaps between windows and windowsills big enough for snow to get through or flimsy electricity installations made in alluminium (one of my friends back in the basic school got half-electrocuted by a faulty socket, result of a shoddy work of a drunken state-employed electrician) are pretty miserable, and that was the building standard for blocks of flats east of the Iron Curtain prior to 1989. I still remember my mom stuffing rags into said gaps around the windows to stave off the draft. This wasn't a Western standard.
Now, after a lot of improvements and investments, it is, yes.
As for the 800 sqm garden, yeah, not in the city center, but if you consider 30 minutes by public transport far enough, it used to be well possible. Parents of a friend of mine are a cook and an accountant, now both retired. They built such a house in Prague-Ďáblice in the 1970s, in a walking distance from a tram terminal. A well paid Google engineer might probably be able to buy this property now on a mortgage. This is just one anecdote of many in my surroundings.
Markets that aren't like this (NYC) have a huge, professional renter class of people who will likely never own a home there, and you can see how the regime is different. It'd be nice if that were more prevalent, IMO anyway.
In NYC or LA you can definitely find rentals which will do a remodel for your specs before you move in. Those are not, of course, $3K/m bare bones 2brs in multiplexes the 99% "professional renters" are looking for.
And sure, you can find places who are gonna pull $4k/m out of you and they're willing to do all kinds of things--even more if you sign a multi-year lease. But only a tiny sliver of Americans will ever do that, or will even ever be able to do that. Most apartments are still in smaller cities like Indianapolis or Nashville; they're big multiplexes, and you absolutely cannot modify them. My hypothesis here is that this is because in most of the US, we generally view renting as a step on the path towards home ownership, so the "worse experience" is supposed to both be efficient and serve as a motivation to join the housing market.
And I think, ultimately, you and I are saying the same thing? In markets where tons of relatively powerful/rich people are renters (NYC, LA, SF) you do get landlords that are far more amenable to things like modification, but in other markets you very much don't. Maybe we disagree on which market has more apartment stock or renters?
It does say "below the 1,063-euros-per-month poverty line in France" which whether it was calculated with the median income in mind or not, it's quite fine as a poverty measure, not just inequality (that's like making less than $12K/year, or if we adjust for cosr of life, less than $18K/year or so).
1) being a fixed percentage of a median, any variation in the median will change the “poverty rate” without it necessarily meaning anything. If the minimum wage increases by 100 euros, the poverty rate will actually increase because the median income will go up and more people will come under X% of it
2) you can’t really compare income across countries. 1000 euros a month means you will receive social housing or subsidies for private rental. It means neither yourself nor your children will pay for any state services (school, school meals, health, swimming pool etc, public transport etc). I’d far far prefer to be on 1k in France than 2k in the US
As a close by European whose been to France many times and have friends there, I can assure you 1000 euros a month doesn't by you much in France. Not sure if it corresponds exactly to $18-20K year, but it's not far.
That said, of course, being someone making 1K in France is better than 2K in the US -- regarding education, health, and several other aspects....
Multiplexes are absolutely not going to allow the modifications to stay: they have the basic appliances because they can maintain them cheaply. Your Whirpool fridge broke? Handyman can pull one from an unoccupied unit or replace with a spare he keeps on hand because it's expected that appliances in 20+ unit building are going to fail regularly. You want a Sub-Zero fridge in your apartment? It only makes sense if you buy one yourself, remove and store the original and then replace it with original when the lease ends. Otherwise the landlord is stuck with servicing a fridge where just a door panel costs more than an entire fridge in other units. Same with everything else.
This has nothing to do with the view on renters but basic economics.
It's not just the capital of Czechia anymore. Those days aren't coming back.
Same with Munich. 40 years ago it was just the capital of Bavaria, now it's an international hub.
It used to be a much faster process, even 20 years ago. It is still a much faster in some other countries. We have a lot of unused brownfields within Prague that could be home to tens of thousands of people, close to the subway ... but they are overgrown and useful to nobody, because an endless paper war is raging over them.
Check how variable rates and fixed rates have compared over time
Basically, the "fixed rate" very rarely was smaller than the floating rate.
Banks know how to calculate the rate ceiling and you're rarely going to win by betting against it. (Why would they risk borrowing it at a smaller cost than the given interest rate at a given time?)
Sure there's a risk of interest shock, that risk is not zero. You can mitigate it by a) not buying something overvalued and b) having a big enough downpayment
Well that's obviously expected. But by taking an fixed rate loan you're basically betting that the rate will increase in the future. Of course there's a risk that the interest rates will stay close to zero for the next 30 years like in Japan.
A lot of banks do charge you a penalty for repaying before the (fixed interest) term in case of fixed rate mortgages.
