This is the year of (our) discontent.
I am setting this thread up because, in a sense, it touches on the many elections that have been discussed here: The European Parliament, the French, UK, Netherlands, even the US.
With the exception of the UK, most of the elections have gone hard right. But, in a sense, maybe the reason why the UK went the opposite way is close to the same, namely much of it is economical.
Time Magazine had a short article on the kids moving to the right mainly because of cost of living and cost of housing issues, That, and also immigration issues.
I know there are many places in the United States where housing is just prohibitive. Our daughter lives in an old summer cabin because she could not afford more. Our one son and his family are living in an old parsonage (manse) where the upper floor sags because they cannot buy a home. They are still lefties, but they are frustrated they cannot get anything better.
Even us. Our house has certainly increased in value since we bought it, but the value has leveled off because of high interest rates. It would likely sell quickly, but we would not be able to afford purchasing a retirement home near our kids, Basically, we are stuck with what we have.
Am wondering if this aligns with your experience.
With the exception of the UK, most of the elections have gone hard right. But, in a sense, maybe the reason why the UK went the opposite way is close to the same, namely much of it is economical.
Time Magazine had a short article on the kids moving to the right mainly because of cost of living and cost of housing issues, That, and also immigration issues.
I know there are many places in the United States where housing is just prohibitive. Our daughter lives in an old summer cabin because she could not afford more. Our one son and his family are living in an old parsonage (manse) where the upper floor sags because they cannot buy a home. They are still lefties, but they are frustrated they cannot get anything better.
Even us. Our house has certainly increased in value since we bought it, but the value has leveled off because of high interest rates. It would likely sell quickly, but we would not be able to afford purchasing a retirement home near our kids, Basically, we are stuck with what we have.
Am wondering if this aligns with your experience.
Comments
Apparently, going by some of the shite I see on social media, there's a strong narrative that everything is Biden's fault
That doesn't appear to be universally true; for example the vote breakdown for Reform shows that they get their strongest support among older voters.
The shift to the right seems strongest in places where a party of some kind of centrist tendency declares there are no alternatives, and offers very little.
Then again the lower propensity of young voters to vote will mean that their polled support doesn't necessarily map neatly to those who actually supported Le Pen (in the example above) in the election.
It's true to say that the gains under Biden weren't particularly equally distributed with a rise in inequality during the first two years of his term: https://www.reuters.com/world/us/us-wealth-inequality-grew-worse-through-current-recovery-ny-fed-study-shows-2024-02-07/
https://www.reuters.com/world/us/us-wealth-inequality-grew-worse-through-current-recovery-ny-fed-study-shows-2024-02-07/
(And younger cohorts will tend to be affected the most because they are typically debt heavy and asset poor).
Note though that Gramp's article shows a *drop* in support for the Republicans among the young.
Both major parties in the US are far better at criticism when they're out of office than governance when they're in. It's just the nature of the (political) animal, I suppose.
By the strictest definition, populism is the power of the people against the elite. When generations cannot find afford housing, they are against the powers that are keeping the prices out of reach. When the people cannot get to a physician when they are ill or hurting, they are against the services that cater only to the rich. When the people feel they are paying too much taxes, and have little to show for it, they expect those who are better off to pick up more of the burden.
For me, immigration is a red herring. I know our nation greatly benefits from immigration. Immigrants are the people who often see things with different eyes and come up with different solutions.
The one problem for most who fear immigration, is that it can change the character of the nation. The Caucasian race is now the minority race in our country. That seems to be way there is such a stigma against darker skinned people in the United States. I cannot speak for Europe, though.
I think the emphasis on immigration is like adding salt to the existing wound of being economically disadvantaged. They certainly do add pressure on housing.
Surely that depends on how many of them are increasing the workforce in the construction trade, no? Isn't construction one of the industries where migrants often work?
Okay, but the paper - from a very quick flick - seems rather light on solutions other than just saying that it's now unrealistic to imagine owning a house and the government should send people signals to this effect.
The reason people are 'obsessed' with owning houses in the US and UK are because for a long time it was one of the few ways of long term savings and 'building wealth'[*], especially after wages were decoupled from productivity rises in the late 70s/early 80s. Additionally, incredibly bad social provision of both social care and social housing and the end of defined benefit pensions made it the only hedge most people had available to them for old age.
[*] Often apparent rather than real apart from specific cohorts.
I think it's also worth examining the (psychological?) relationship between home ownership, personal wealth and security, which has been around for a long, long time. And how that "cultural" desire has been promoted and exploited, ever since financial products came into being which enabled it (which have also been around for a long, long time).
Yes. You could (if sufficiently cynical) see bad social provision as being a not unintentional driver of desire for private housing, which for most people means taking on debt, as well as a factor that pushes up asset prices.
As for the government sending signals about the expectation of home ownership, I don't expect to see this any time soon. For one thing, I would argue that one of the persistent roles of British government, more than most, is to protect the ownership of private property. Also, from the wikipedia entry on home ownership: And from immediately above that quote: As far as long-term security goes, a couple of questions occur to me:
What proportion of the world's existing housing stock will no longer be habitable or insurable in 2050?
To what extent does private housing look like a government-sponsored asset bubble? (And how far past the point are we of this being about the efficiency of free markets.)
Interestingly I've also read that in Japan houses are a depreciating asset like cars.
Sure, but that's the case with Liberalism more generally. On housing the role taken by the British government is to ensure that houses hold their value in real terms (and in particular never significantly fall), because this is how a large number of the people who vote have come to measure their net worth.
Yeah but for most people the more pressing question is 'how will I pay for my housing once I'm no longer earning' (which is a big motivator for wanting to own outright at some point).
It is to the extent that QE encouraged extra money to flow into assets, but once interest rates fell there was always going to be a certain amount of natural increase in asset prices.
This is probably still true for some - but for a number of friends approaching or passing pension age in the UK, "no longer earning" is not an option, if they want to keep their current roofs over their heads. In short, the aspirational social contract of "work, buy house, pay off mortgage, retire" is already breaking down. (I recognise that "have family" is usually in there.)
Younger generations already recognise that realising this aspiration is, for many of them, out of their hands. The future is something they can't afford to think about.
And even if, by some good fortune, you are young and in a position to buy, it's an increasingly uncertain way of securing housing for your future, given the slowly but steadily-increasing probability of owning a property which might not last as long as you do.
In my experience, people in their teens and twenties are rather more likely to see the future through the lens of climate change. I find their realism encouraging but, as they point out to me, they are paying a remarkably high price for it.
That's true of some asset classes, but in the case of UK housing, I think it's more a result of the restriction of supply in recent years. I regard UK house-builders as having adopted a similar approach to their output as OPEC.
Yes, and this is clearly not sustainable as no one can go on working forever and the employment prospects for older people who are even slightly infirm aren't great, so requires a political fix or a series of political fixes.
Using the UK (as you reference it below), this is a form of catastrophism/millenarianism. The majority of housing in the UK is not going to disappear or become uninsurable simply because of climate change, if you are in your 20s you can't just assume you don't have to worry about what happens when you are 70 because you are just going to die early.
Depends on what you mean by recent; until 2019 the house price rises were easily explainable via interest rates going down to 0.75% (with 3/5 year fixed available at 3/4%), house prices went up because interest rates went. In 2020 Covid-Era QE starts again in earnest, driving up all asset prices everywhere.
Building a significant number of actual *houses* on its own is unlikely to do that much, purely because new houses are an imperfect substitute for current stock (which are priced around the availability of jobs and transport) (the real problem in the UK is wage stagnation).
In the long term, owning a home has to be cheaper than renting, on average, just like not having insurance is cheaper than having insurance. The risk profile that each presents is different, though.
Assuming, that is, that we are talking about owning vs renting the same kind of home. Very often, the comparisons between home-owning and renting end up being a comparison between owning a house with a bit of a garden and renting an apartment, which is not at all a like comparison.
None of this is fair or equitable of course. We have on the one hand pensioners who never earned enough to buy still paying rent until they die, alongside others who own their property outright and live rent free with a private or company pension on the side. It's a massive divide.
And it's perpetuated - middle aged home owners have from their accommodation situation alone an advantage over renters in having disposable income to help their adult children with getting their own start in life.
Yep. Buy to let, let to a bunch of people on housing benefit and the government pays your mortgage for you.
That still doesn't solve the problem of how to pay for it once you retire.
Well, it's easier to pay a lower rent than a higher one.
You're right that the majority of housing is unlikely to become beyond use. But we still appear to be basing flood risk (etc) on previous weather patterns. One of the big unknowns is how much more extreme weather is going to become - the current models are struggling.
I had in mind the last 30 years, maybe more. (Given that some of us live in houses built 400 years ago).
This government-commissioned research (2010) concludes that supply is a major factor, over a significant period of time. It doesn't investigate the agenda of the house-builders: The house-builder's agenda is the subject of this report in the Independent (2016): Regarding your point about political fixes, and their likelihood, much of the article comprises the various parties blaming each other.
But to the point Marvin alludes to; a lower rent is still higher than 'zero'.
True, but 'retired' =/= 'no money'. So the problem is decreased when rents are lower as they become affordable for a higher proportion.
The trouble is that there is already a high level of pensioner poverty among owner occupiers (around 20%), most people in retirement have very small amounts of income, it's not like they'll have any significant surplus available to pay rent.
How is this resolved in other countries with higher proportions of people renting?
This is, of course, something that could be changed, either increasing the notice period or removing sale of the property as grounds for eviction. Decoupling the rental property market from the owner-occupier market would be a nice side effect of this.
And potentially devastating if you are old and infirm.
Though in the short term potentially chaotic and miserable for all concerned as a million landlords raced for the exit before it came in.
Well this is the problem we have with having reduced our social housing stock and effectively passed the job on to private landlords - they can now hold us to ransom.
I know, I've got relatives who would be directly affected (as tenants) - but we'd be naive not to price in the immediate outlook of introducing such a policy. Start the movement towards it now, this morning, and it basically gives at least 12 months if not 18 months notice to exit the market before it comes in.
and, I suppose, it's also the problem with the government having blown up private pension provision such that thousands of people saw buy to let as a sensible alternative. Which, looking at it in the round and in no position to join them myself, you'd have to say it was -purely in returns terms (leaving aside social desirability).
30 years takes us back to 1994 and that's well within the period of the Great Moderation on both sides of the Atlantic.
You can look at this in raw numbers, in terms of numbers of houses per capita and the UK is towards the lower end of most of Europe. Costs are disproportionately higher though, and somewhat dominated by the concentration of the economy in the South East - hence the remark regarding new housing being an imperfect substitute to existing housing.
Historically the peak of house building in the UK was also the peak of social housing provision, and while much of that did result in the provision of good quality homes, quite a significant percentage was delivered in the form of car dependent suburbs and/or sink estates (often using LPS construction). Which leads to another problem - which does have a climate angle - a lot of existing housing in the UK is of quite poor quality and the result of previous attempts to fix the issue on the cheap.
Fixing things in climate terms would require a significant developmental rethink,; planning for a lot more public transport and a serious drive to re-balance the economy away form the South East.
I think that depends. Bearing in mind the value of tax relief on contributions, my pension has performed better than property would have in my region.
I do see that things may be different in the SE of England / London and other hotspots. So I wonder if truly regenerating the regions might rebalance the property market (along with more building of course).
well it should - but the government doesn't have a happy track record of forcing things to change. Coming from Birmingham, there's an engrained folk memory of when the city was kneecapped by Hugh Dalton and then Harold Wilson because it was too successful:
https://www.business-live.co.uk/economic-development/birmingham-finally-bouncing-back-after-8772639
God, that sounds so awesome to me.
(Any ghosts?) 👻
Depending on whether you believe in them, yes. Nice ones though.
But that’s a whole other thread I think.
I do, definitely, and other things. I wonder what board would be suitable, not for debating their existence, but talking about local legends or personal/family experiences. All Saints? Heaven? I’d be interested in such a thread.
As several posters identify, our approach to housing epitomises a winners and losers attitude - a significant driver and expression of inequality.
As you say, concentration (of the economy) is a big issue. I think the government has quite a few levers it can pull. As well as incentives - making it more possible and desirable to live and work in more places, there are disincentives, which can potentially be more targetted.
The Wealth Tax Commission came up with some interesting ideas - they recommended a one-off wealth tax as a way of raising tax revenue, and suggested an annual tax if the aim was to reduce wealth inequality. (Without saying whether that was desirable.)
It would be interesting to consider the effect of, say, an infrequent wealth tax (say every five years) on property prices.
One significant question is what happens when you introduce initiatives to drive down prices in a market with a limited supply. (Which also applies to rent controls.)
I wouldn't disagree; which is why concentrating on supply alone is in many ways the cheap answer politically, because there's nothing to stop most of the new houses ending up in private hands and because of the lack of social housing they become the license for guaranteed returns on the back of housing benefit.
There are other advantages to home ownership. One is a desire to keep the property up to snuff. There is also a deeper commitment to the community. Home ownership provides a more diversified tax base, There is less of a turnover of neighbors. Instead of annual changes, it may take a generation to change a neighborhood--when we moved into ours, were the youngest family on the block. Thirty years later, we are now the oldest couple on the block. I think you get to know your neighbors better too in that we have a common interest in the neighborhood.