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12 Reasons Houses Cost More

Discussion in 'Off-Topic' started by Zardnaar, Dec 12, 2019.

  1. civvver

    civvver Deity

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    Expensive housing is only a real problem in cities where land/housing is in short supply compared to demand. It's a localized problem. With the low interest rates you can get a really nice house in the suburbs here for $1600 a month. If you go smaller or older you can easily drop that to $1000-1200. Compare to urban living where a 1 bedroom apartment might be $2000 a month.
     
  2. MaryKB

    MaryKB Deity Supporter

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    I recently read something about how my city was ranked #1 in North America for median salary compared to cost of living. Maybe that's why I have so much disposable income lol!

    I bought my house in 2016 for $220,000, and I have 3,600 square feet, plus a finished basement. I pay $750 a month for my mortgage, plus like $4000 a year ($350 per month) for taxes, and $000 a year ($50 a month) for insurance. So I guess my monthly housing cost is really $1150? Not bad I think, and my home was built in 2001.
     
  3. Broken_Erika

    Broken_Erika Nothing

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    My parents paid $17,000 for their house in the mid 70's.
     
  4. Arwon

    Arwon

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    In Australia, owning a second home is one of the primary ways rich people make money, because of a preferential tax treatment called negative gearing. Basically if you lose income on a house by collecting less rent than the interest costs, you deduct the losses from taxable income. So it's strongly tax minimising and the system encourages ppl to treat shelter as a commodity rather than a right.

    Negative gearing strongly encourages ppl to invest in buying houses instead of any other more socially useful investment, it reduces tax revenue and has exactly the impact on housing affordability that you'd expect. Sydney and Melbourne are as unaffordable as Singapore.

    It also leaves us with a class of rich baby boomers so strongly invested in ever-increasing house prices, that all sorts of other policy (planning, macroeconomic, tenancy rights, direct grants to new home buyers) gets perverted to support the housing bubble. State governments also have a strong interest in pumping up house prices because stamp duty on sales is one of their main income sources so that feeds into the bubble too.

    New Zealand has negative gearing too, it's likely a big factor there as well.
     
    Last edited: Dec 13, 2019
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  5. rah

    rah Deity Supporter

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    Yeah, interest rates make a huge difference. Everyone talk how much cheaper it was for older folk but our house (around 1500 sq feet) was around 145k but with the interest the mortgage + the extras was around 1100 and rose during the life for taxes, so around what MK pays for a larger more expensive home. (and newer) So maybe we didn't have it quite so nice.
     
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  6. GoodEnoughForMe

    GoodEnoughForMe n.m.s.s.

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    That's still pretty expensive. Median household income is about $63000, and the recommended mortgage as a % of income is no higher than 28%. So, to take the $1600 a month, you'd have to make $5700 a month to maintain recommended mortgage to income levels. That's higher than the median slightly, as it puts required annual income at about $68000.

    The smaller number isn't terrible. $1000 a month would require $43000 a year. But that's still tough for first time home buyers in a way it used to not be, given student debt levels. And 28% is the max level. And we're talking about Michigan, one of the cheapest states in the country.
     
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  7. Zardnaar

    Zardnaar Deity

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    I live in the cheapest city here and at one point my income was higher than my friends in the most expensive city.

    She managed to get a house on paper before the prices completely exploded. Mary's 163% increase over 30 years is funny we had 100% in 7 years.

    You would be hard pressed to find anything under $180k anywhere in the country maybe small town or rural area. Anything new starts at around $300k. Average house price in Auckland is around 600k. Prices in USD.

    Mortgage free next month. In theory I could sell this 1930s house go to Michigan and by a house near MaryKB freehold and have a bigger better house that's 70 years newer. Hi Mary I'm your new neighbor.

    I wouldn't buy any house built after the 80s here to be honest but get a retrofitted house from the 70s or early 80s. To many Yahoo's in late 80s and 90s building them.
     
  8. Commodore

    Commodore Technology of Peace

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    Okay, I don't disagree with this, but it doesn't really address the point I was bringing up. I was making the point that while access to housing should be a basic human right, having ownership of that housing isn't necessarily a right because when you buy a house, you aren't just purchasing the house, you are purchasing ownership rights to the land it is built upon as well. Land ownership is not something I think should be a right, with "right" being defined as "something the government guarantees for all citizens."

    Each citizen should still have to purchase ownership rights to their housing if they desire it. However, I do support policies that would level the playing field between average citizens just trying to buy a house for their family and big property management companies that want to kill the idea of homeownership and turn everyone into renters.
     
  9. Zardnaar

    Zardnaar Deity

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    More tax on Airbnb and investors. Make new builds avoid the extra tax? If you want to invest in property fair enough build new property?
     
  10. Hygro

    Hygro soundcloud.com/hygro/

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    I paid that much a month in San Antonio, a “cheap” city for a 700 sq ft shared janky as townhouse with neighbors on two walls, for rent.
     
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  11. JPetroski

    JPetroski Emperor

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    There's many cities around here where housing is inexpensive (for here, but the cost of labor is higher here as we're about $3 over the federal minimum wage) but the problem is that they are in unsafe areas and the taxes you pay for the house as well as your car are exorbitantly high (in the city next door, the mill rate is 50.50, or 4th highest in the state, compared to the 27.18 I pay). Your kids also get a terrible education (my town has the 7th best school district in the state, the city next door doesn't even rank in the top 87 and is simply given--the poorest--letter grade).

    The city right next door has 54 homes listed on realtor right now for less that $150k (23 less than $125k, and 113 under $200k which I still think is fairly achievable around here) but who on earth wants to live there? So it's not necessarily that housing is expensive so much as housing in safe areas and places where you're actually getting value for your tax dollar are very expensive. It's a challenging problem to confront as it's hard to create affordable housing without simultaneously increasing those issues.

    One thing you might all consider bringing up in your town council is the idea of a land lease. My town has tried to address the lack of low income housing in our community by allowing people to lease land from the town and then build a home on it that the individual owns. For the first three years after the purchase of the home, the lease is something low (I think it might even be $1). After that, the lease is the same amount that you would pay in taxes if you actually owned the land. This allows homes to be affordable and attainable while still giving the pride of home ownership and allowing taxes to be low (because the town doesn't construct or purchase the home - the owner does that - thus, there isn't a need to "fund" the "creation" of this - all that is needed is to forgo the one-time profit that the sale of the land it is built on would provide). It's not going to work everywhere but if your town doesn't have something like it, it's an interesting way to try and address the problem.
     
  12. hobbsyoyo

    hobbsyoyo Deity

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    Nah, because many of the buyers will be speculating investors, not millenials. The millenials will be stuck renting from the speculators.

    The problem wasn't social housing itself, it was racist, non-caring politicians who approved project without thinking through how to make them apart of communities. In many places, cities and states happily took federal housing grants so they could build crappy housing as far away from the white people as they could. The feds took little interest in following up with any of these projects which was a huge mistake.
     
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  13. Arwon

    Arwon

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    I guess the entirety of urban Australia is one kind of "localised"
     
  14. Zardnaar

    Zardnaar Deity

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    Whole country of NZ as well.

    We're bigger than UK, not much smaller than Italy/France/Germany.

    Can't just go and build on farm land. Even if we could not enough builders.
     
  15. rah

    rah Deity Supporter

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    Which is why I said you have to show some care to do it right. Many cities made the same problem the first time around. And most have learned from their mistakes.
     
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  16. Zardnaar

    Zardnaar Deity

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    We dispersed the social housing into existing suburbs. Not an option now at least here have to build new suburbs which need to be a mix of social and private housing IMHO.

    Governments need to front up the money working with reliable contractors. Set up some sort of company to run it as a non profit.
     

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