House prices are surging once again

https://www.economist.com/finance-and-economics/2024/06/16/why-house-prices-are-surging-once-again

by belter • 2 years ago

27 29 2 years ago

As an Australian house owner, I consider the local perception that house prices have recently been increasing[0] to be largely based on domestic misconception. Rationale: If you take in to account USD/AUD currency shift[1] over the recent period, house prices are functionally flat or thereabouts. This view also accords better with cost of living shifts. Given this 'boots on the ground' view, I find it strange and remarkable that the Economist, which usually has fairly well reasoned journalism (and excellent editing), selects Australia as a stand-out market casually based upon some inspecific Goldies' analysis.

[0] https://www.abs.gov.au/statistics/economy/price-indexes-and-... [1] https://www.macrotrends.net/2551/australian-us-dollar-exchan...

keyle• 2 years ago

I'm not sure I understand what you're saying, the data is ending in 2021, we're in 2024. The landscape looks quite different after the pandemic rebound.

Also the fact that you compare it to the USD/AUD is silly, 99+% of us aren't paid in USD. If I could barely afford a 1.1M house in 2020 that is now 1.6M, we have a big problem.

The affordability crisis is local first.

We were lucky we bought our house in 2018. It's doubled in value since. Rejoice? No. Why? Because if we sold, it's not like we could afford any better. We've just raised the floor for everyone, essentially locking out the youth. This isn't good by any metrics.

contingencies2• 2 years ago

I didn't comment on local affordability, which I agree has been bad for 20+ years. What I commented on was the false perception that aggregate value has increased "because the number went up", which seems to dominate local media. Pre/post COVID doesn't seem to have changed that.

unlikelymordant• 2 years ago

Australian houses aren't bought with american dollars though. If this were the case wouldnt we see a big correlation between house prices and USD exchange rates? Why wouldn't the correlation be with other currencies such as china. Honest questions, it seems to me like massive immigration/low supply seems to e plain things pretty well.

ramshanker• 2 years ago

I can confirm the same for my locality in India. ~20 to ~30% jump in last 1year.

mewpmewp23• 2 years ago

This is hardly a surge though. Only 3 to 6 percent increase year over year.

bobthepanda5• 2 years ago

6.5 YoY in the US would be double YoY inflation.

mewpmewp23• 2 years ago

That is still less than average in the past 30 years, no?

danparsonson• 2 years ago

A six percent annual increase will double prices in twelve years.

ctime• 2 years ago

Real estate often operates on margins and has long been considered a prime store of value. In the United States, the origins of cash used in real estate transactions are rarely scrutinized, and cash-only purchases have reached a decade high this year.

Why does real estate remain relatively strong in some countries? Likely because savvy investors either want to live there or believe others will.

Real estate prices in California are at their peak, and while the media might anticipate a housing crash, it's unlikely. With large amounts of money needing a place to go and states like Florida enacting xenophobic policies that deter investment, California remains an attractive option.

[1] [NAR Realtor Blog](https://www.nar.realtor/blogs/economists-outlook/the-share-o...)

[2] [CNN](https://amp.cnn.com/cnn/2024/06/17/homes/florida-law-bans-ch...)

tssva• 2 years ago

I live in, or did until recently technically now I live a little outside, a very competitive housing market. All cash offers have become the norm to secure housing in the most in demand areas even for those purchasing their primary homes vs investment properties.

How this often works is a cash offer financer completes the purchase from the seller and in turn sells it to the buyer once their mortgage has been secured. The buyer rents the house from the financier until this happens. Sometimes the agreement is the financier will only purchase the property if the buyer doesn’t have their mortgage in place by the closing date.

andrewmutz• 2 years ago

There is a housing shortage caused by excessive regulation. High prices will continue until until it’s addressed.

more_corn• 2 years ago

Yeah regulations like fire safety. Roll those back.

riffic• 2 years ago

The shirtwaists aren't going to triangle themselves now.

bobthepanda5• 2 years ago

The US actually has higher rates of fire fatalities than other, denser OECD countries. https://www.usfa.fema.gov/downloads/pdf/statistics/v12i8.pdf

If the current zoning regulations are an attempt to have people not die in fires, they’re not working that well.

freitzkriesler23• 2 years ago

Dont be disingenuous with strawmen.

It has everything to do with restrictive zoning and building codes. NYC is a prime example, there are tons of empty commercial office buildings. But they will never house people because building codes require every room to have natural light. Rules also restrict share and boarding houses which used to provide affordable housing to many people.

No one said affordable housing needed to have windows in every room or home very room to have a bathroom. They're affordable for a reason and this is the norm in every other part of the world.

It's time to start thinking like every other country and culture.

freitzkriesler23• 2 years ago

The excessive regulations are restrictive zoning. There's plenty of land to build in LA and San Francisco but too many nimbys who keep things from not changing.

It doesn't help that an unprecedented amount of immigrants, mostly illegal, have been let into the country to suppress wages. That puts upward pressure on house stock.

notfed• 2 years ago

This is highly variant depending on where you live, and in many places the prices are dropping.

freitzkriesler23• 2 years ago

Annoying becauae someone on my block with a similar comp just put their house for sale at 370 and I bought for 395. This is on Texas where prices are saner.

sys_64738• 2 years ago

"Rohin Dhar, a housing expert, has pointed out that lots of listings in Florida feature the phrase “motivated”, which implies people are selling in a hurry."

Probably trying to escape the silent home insurance crisis in FL more than any other reason.

nojvek• 2 years ago

What is the silent home insurance crisis?

jareklupinski• 2 years ago

if they say, it wouldn't be silent ;)

e15ctr0n• 2 years ago

The skyrocketing cost of home insurance in Florida is causing some residents to sell their properties and relocate. https://www.newsweek.com/florida- homeowners-relocating-insurance-crisis-cost-1893248 · Apr 24, 2024

House prices are surging once again

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