In the Midwest city where I live, the price for a new apartment is almost or even more than a house in the suburbs. All these apartments usually end up empty or get rented out. Such a waste of money.
What's wrong with renting? I refuse to buy until I hit at least my 40s and/or start a family and decide I will stay put in a place.
I've seen people go through the incredible pain of having to either turn down job offers because they can't sell in a month's time and relocate or be drowned in the myriad issues involved in selling/renting out.
Personally I can't justify buying a house to myself until I either hit my 40s or have picked a corner of the world I want to settle down with a family and probably die and get buried there.
EDIT: why downvote? I'm not opposing people buying houses, I'm opposing demonizing renting out when for lots of people it's the preferred option.
U.K. has a viscous cycle where if your parents are in commuting distance of London you can live with them for a few years and the money you save from not renting will fund a deposit. By the time you’re 30 you can then by and your career will have progressed
If you can’t benefit from that then you spend that deposit on renting, which means you can’t buy in your 30s and are trapped in the rent cycle.
> If you can’t benefit from that then you spend that deposit on renting, which means you can’t buy in your 30s and are trapped in the rent cycle.
I disagree with this - assuming the average white collar job (given HN), you _will_ progress salarywise from your early 20s to your early 30s.
When I was a Jr. Software Dev at 23, I both didn't have the money to afford a house where I got all the job offers (which wouldn't make sense), nor would it have been a good idea given I would've wanted to stay open to chasing higher salaries after 1-3 years elsewhere (which I did).
Maybe some decades ago it was common to spend your whole professional career in the same city, but as a dev I've had jobs pop up in different cities, heck even different countries!
Jobs in different cities in the U.K.? Jobs in London pay far more than ones in Manchester or Birmingham, let alone the majority of the country.
That’s the point - the junior jobs tend to be in the major cities especially London. If you are from say the kings lynn suburbs, or barnstaple, or thirsk, it’s unlikely you’ll get a job with high career growth without spending a decade with all you income in rent and commute as you won’t be living with parents and saving £1200 a month (in the London case)
Most people are looking to settle down in one place by their 30s when they have kids. Of course that doesn’t happen as much now in the western world, mainly due to housing costs rather than active choice, and sure some are happy to be global nomads, never put down roots, never have a family. Renting can make sense for them.
Doesn’t change the fact that most people have at least one child, and benefit from having a steady home they own near their parents. This skews massively in favour of those in London and commuting distance as that’s where the highest paid jobs are.
It's a great advantage of people from the London area, especially inside zone 6 where travel is much cheaper than outside the TFL area.
However, it is also likewise a trap. Prices have moved quicker than people can save, unless they have a lucrative career or live like a monk
I know one person trapped like this, he's 30 this year. He has good savings but can't afford to buy on his own, bank won't lend enough on his salary, he needs a partner, but it's harder to find one when you live at home.
I think it's a broader phenomenon. I was raised in the capital city of my country, but moved to a smaller city because I can work remotely and was largely priced out of the real estate market at home anyway.
This allowed me to afford an apartment while my siblings who stayed are basically stuck renting.
Odd, renting while I lived in the UK was the only way I was able to save.
If I had attempted to buy, I would literally have financially died (not to mention wouldn't have been able to pursue better jobs elsewhere at the drop of a hat - month's notice).
Not only UK, Europe in general is stuck in this nonsense. People buy properties, tenants pay their mortgage. In 15 years the property is yours mostly at the expense of someone else plus it gained in value. After owning it for so long and selling the property you probably pay lower capital gains from that too. Unless you put all that money in the right stocks in 2010, renting just doesn’t make all that much sense in this economy.
> renting just doesn’t make all that much sense in this economy
I disagree.
Example scenario of many young Europeans in their 20s:
- living in small or mid-sized city
- job offer pops up paying significantly more across the country, either capital or one of the top cities
- move and earn significantly more (even when adjusted for CoL)
- continue progressing careerwise
- job offer pops up elsewhere, possibly in other EU countries, pays significantly more
A reasonable person in their 20s would allow themselves the chance to focus on professional career growth/salary growth up until they hit their mid-30s in which they can start considering settling in a given place and purchasing. Before that it's nonsensical.
To give my own example, I went through various cities across several countries, starting at 12k, then a few years later job offer in another country for 33k, then a few years later at 54k, then at 115k, all before 30 years old (because I allowed myself to be anchor-free).
The rest who stayed put in the same city? 12k to 30k in the same span of time.
Anyone telling a person in their 20s: "buy a house and stay put" is giving terrible advice. The advice should be something along the lines of: "what you do in your 20s will bear fruits in your 30s, stay open-minded, adventurous, don't be afraid to burn out and discover your limits, see the world before your parents get old, and try your hardest".
This is the thing that is so depressing. I know someone who owns 6 apartments, 5 of which he has rented out and his family is living in the 6th. Every couple of years, he will save enough money for the down payment, buy an apartment and his tenants end up paying the mortgage.
His tenants will never be able to save enough money for a down payment, so they are stuck in a endless cycle of paying someone else's mortgage, just for the privilege of having a roof over their heads. If wages were fair, if mega corps like Blackrock weren't allowed to buy entire neighborhoods, maybe his tenants will have a fighting chance of owning a place for themselves, even if it is just a small two bedroom apartment.
A dude I used to work with - he used to buy a couple of apartments in buildings right when they get started (he has contacts all over a major city). By the time the buildings are finished 3 years later, the "value" of those apartments have already gone up anywhere from 10 to 20 percent or more, depending on the area. He'd sell for a profit, rinse and repeat. His only goal is to flip - sometimes he buys apartments without even looking at them. Of course it is legal, but is it ethical?
The problem with renting, in areas like the parent poster is talking about, is that in those areas almost anyone who can hold down a full time job, even a low wage job, can afford to buy a house. When you rent an apartment, you end up living around the people who can't hold down a full time job. Which is not always ideal.
why downvote
for lots of people it's the preferred option.
I am going to guess the down votes represent dissent from the idea that renting is generally the preferred option.
Renting is definitely more flexible, but it is also basically just a regressive tax that transfers wealth from those at the lower end of the income distribution to those closer to the top.
If housing was affordable, I think you'd find that most would opt to own and there would be less ability for those with means to prey on those without.
By that kind of reasoning what purchased goods or services I get from any entity wealthier than me aren't a regressive tax? For instance I bought a sandwich from Subway yesterday rather than making one at home, because it was more convenient. Was that a regressive tax on my food?
Imagine there is a drought and the price of food rises, because food is scarce. A few people can no longer afford the whole sandwich.
To pander to those who can no longer buy the whole sandwich, and take advantage of the drought, those well off start buying even more food, more than they need, and reselling the sandwich, per-bite, with huge markup. This also drives the price even higher, due both to the markup and to the increased demand from the resellers. Now even less people can afford the full sandwich.
The resellers parasitic per-bite markup is the regressive tax, not the sale of the sandwich. The markup transfers wealth from those without the ability to buy the whole sandwich to those who can resell, when reselling is providing no value. Everyone was able to buy sandwiches just fine, before the drought. Those buying per-bite are also now going hungry, most meals, because they can only afford a few bites.
The solution is either to find ways to end the drought, ration the available full sandwiches, or sell smaller sandwiches, not to allow drought-profiteering that exacerbates the sandwich scarcity and makes more people go hungry.
In my Midwest city the reason for this is because a huge amount of the cost associated with building has nothing to do with construction. You have to bribe the local politician to get zoning approval and then hold community meetings run by expensive consultants you need to employ. With such huge upfront fixed costs it only makes sense to build luxury. If we reduce the friction to building, more housing would be built and affordable styles would be much easier to pencil out.
But see, to the politicians this is a feature, not a bug. It’s the same reason that it’s incredibly expensive in terms of permitting and such to start a brick and mortar business in many cities. They would rather leave the locations unoccupied and available for something that will bring in high tax revenue than tie them up with low revenue occupants.
> With such huge upfront fixed costs it only makes sense to build luxury.
You really believe that if there were less upfront fixed costs, that developers wouldn’t still default to building “luxury” as long as nothing was stopping them? The profit margin incentives are all still the same, regardless of the level of community/political opposition.
when fixed costs are high you want to invest more to raise the final price. The lower the fixed costs the less sense it makes to build the most expensive thing you can.
there are only so many people looking for those units. As more units are built the competition to sell those units will heat up. Either prices drop on those units, or theyre replaced by units that are cheaper to build. Right now they can sell all the luxury units they build so no reason to build anything else. So removing the barriers doesnt itself make luxury less appealing for developers, but it increases the number of units built and that makes luxury less appealing for developers. It will still make sense to build luxury, but it wont make sense to build only luxury.
There are other reasons too. Personally I would not mind living in communist style blocks and I know some others agree. If it was legal to build those they might be created because you can fit so many more units on a plot compared to luxury housing.
North Korea? Pretty sure some central apartments or houses in Pyongyang are accessible only for the elite (which may have different mechanism to obtain than just having enough cash but logic is same - many many want to live there, only the top gets them). There are few other countries.
The point is, it doesn't matter. Jobs and services are centralized to cities or their outskirts, thus folks move in. The only reason why properties cost there so much. Not sure what are you even trying to say with your last sentence, pretty self-contradictory. If all could work 100% from home we would see suburbia explode in prices and development. Not happening in way I mean this century, cities are growing as fast as possible (and some more, thanx to also people like you).
> Not sure what are you even trying to say with your last sentence, pretty self-contradictory.
Not self contradictory at all. The sentence i was responding said hundreds of thousands want all to live “at the same place”. But they don’t all want to live “at the same place”. They just want to live at a good place. Mainly one where they can find a job. If we create more good places to live at they will be happy to live at the other good places. Instead of concentrating all the economic activity to a few places we could incentivise many smaller towns with good jobs so not everyone needs to live “at the same place”.
> If all could work 100% from home we would see suburbia explode in prices and development.
Didn’t say anything about working from home. Not sure what you are arguing against here.
This is exactly right, you captured my sentiment pretty well
What exactly is the endgame here? Build rows and rows of mile high apartment buildings indefinitely?
It’s not an easy problem to solve and the way people just beat the bUiLd mOrE drum is super annoying because you can’t just build with wreckless abandon it’s not that simple
Sure you can. It requires a responsible government to align incentives. There is no axiomatic problem for building enough housing. The problem is the housing-as-investment paradigm, which only works if there is a perpetual housing shortage to drive prices well above values. Housing-as-investment creates a vicious cycle of shortage and incentivized harms to society in the interest of driving prices of housing up via a lack of desirable options.
To have a decent society for our children in a growing country, housing cannot be an investment. The value of a house must generally track downward with the depreciation of its structure. You need to separate the cost of housing from the cost of land, and in cities at least, tax land in accordance with its utility, encouraging vertical development in high population density areas.
The key to this working efficiently is responsible planning and zoning. Single family dwellings / 1-2 story housing is not likely to be viable adjacent to growing urban areas. Zoning should reflect this. This disincentives building single family homes in these areas, since taxation will be based on the fact that the lot could house a.32 unit condo, minimum lot sizes also reflect that planning, so property taxes would become quickly onerous for a single family home. If you want to live in a city, you should be amenable to living in a higher population density dwelling. I would imagine that for people that like their ___location, development deals that include a ground floor or penthouse apartment in exchange for part of the land value to a developer would become part of the norm. That way you can step out of the way, live somewhere else for 6 months and come home to your new flat. OTOH if you are just rich and stubborn, you can just pay the taxes.. but that will curtail the value of the home to a reasonable level. The current system rewards instead of penalizes homeowners for standing in the way of progress. At least tax revenues can be useful to the community.
Yeah dude you completely missed what I said I guess - I said you can’t build with wreckless abandon which means with “responsible government” as you put it
Oh, well, it’s not the first time I have demonstrated my capacity for stupidity. Maybe I read a different comment and answered yours, or maybe II didn’t really read it completely before I decided what it said. Either way, my apologies.
There are solutions, I think, to most of our issues… but the bias to avoid losing more than we are willing to invest to gain hobbles us.
