Maybe because with Airbnb instead of renting out a house for $2000 a month to someone looking to live there they can rent it out for $1000 a week to tourists and double their profit.
this post was submitted on 28 Oct 2024
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a home I bought in 2010 for around 300k is now 600k+, I couldn't afford it now, even though it's exactly the same. we upgraded and expanded the kitchen while living there, added a bathroom. so... yeah, wtf.
Greed. And the genuine belief that "the world is not enough"
- Land is scarce where people want to live, it's always going to get more expensive as more people want to live there.
- Low interest rates caused large investment firms to seek higher rates by being rental owners instead of mortgage owners. This forced up rent to make returns on investment. As the realities of being a landlord are realized this might get better.
- New building nationally wasn't keeping pace pre covid, but it was by a negligible amount. Post covid, new building is years behind where it needs to be.
- High interest rates now has effectively got people stuck in existing homes, because a new mortgage would be double the payment.
- Inflation happened, 20% of the increase since 2020 is just inflation.
- Short term rentals have devasted the residential market in popular tourist areas, forcing them to charge hotel taxes and follow those regulations is hopefully going to start correcting this.
I think you elude to it, but just to clarify...VC's and companies have been buying homes like crazy, thus reducing an already anemic inventory.
Land is the only commodity that's actual worth anything, perpetually.
True but not the cause of this massive change in real estate values.
True, it's not the only thing, But a big part of it.
Because population is increasing faster than new housing is being built. There is a supply problem and demand is in elastic. The supply problem is the result of government’s continual suppression of new construction, via permitting red tape and overeager density zoning.
I guess it's by country basis. A lot of places have negative population growth yet the prices skyrocket. It does make me think what is the actual reason in those places
I was listening to the radio and they had said to keep up with housing demand in my area they would need to create 35,000 homes per year for 30 years. Meanwhile we get maybe 25 houses at most. In 6 years the typical rent has quadrupled.
Horrible world we live in.
The biggest reason that is often overlooked is wealth inequality. The rich keep accumulating wealth, and real estate is a scarce form of wealth that holds value, produces a return, and can be accumulated. It probably accelerated recently because of the large amount of money that was dumped into the system around covid; that was yet another opportunity for the wealthy to grab a bigger share of the pie.
If things keep going this way, we're going to get into a situation where regular people don't own houses anymore, and rent is a much larger percentage of your income.
The commercial real estate market has taken a big hit since COVID and RTO is generally unpopular. In North America this has led to a shift to buying residential housing for rental or resale.
I remember back before 2020 there was tons of mountain and cabins and homes and stuff like that anywhere from 2:50 to 500K. Now you won’t find a single one less than 800k…
WFH and good satellite internet were a bit of a game changer here. You could now live in a remote place and work a job with a high income.
Regular homes are just as bad. I’m seeing homes in my area that sold for around $200 to 300K in 2019, now they are 500k and above.
Supply and demand here. There aren't enough houses being build for people (and private investors) that want to buy them. The price rises.
I don’t understand how this makes any sense? Salaries were not doubled, but somehow the price of all homes are now twice as much.
Lots to unpack with this one. First, some people's salaries were doubled. There has been some niche sectors of industry that have seen large year over year increases in income, specifically some STEM fields. Second, housing price rises are not linear across all pricepoints. The cheaper house are going up significantly faster than more expensive homes. Why? Because there are more people shopping at the lower pricepoints. When we bought our new-to-us house a few years ago buying a house $150k more expensive than the house were were living in got us very little more house. However, buying a house $250k more expensive got a lot more house (larger, better neighborhood, more outside space, etc).
Crime.
Investors.
China's entire modern "economic miracle" is founded on housing as an investment vehicle.
You can in part blame Canadian Conservatives in BC, specifically Bill Vanderzam, Christy Clark, Gordon Campbell and Kevin Falcon; as well as federally, Brian Mulroney and Stephen Harper, for importing this behaviour and concept from Asia and its rise here. Initially in the late 1980s and early 1990s it was about attracting the elite of Hong Kong, who were afraid of what the handover of Hong Kong to the CCP would mean. (And rightly so, as it turns out.)
Vancouver BC is infamously unaffordable, and its entirely because of investors, both national and international using its real estate as a ridiculously effective investment vehicle. If you had purchased a home in the suburbs for 500k in 2006, that home would be worth well over 2 to even 3 million dollars today.
When Vancouver started capping out and hitting limits investors moved on to apply the same practices all over the continent.
I feel the main reason is corporate entry into the market. Foreign and domestic. The ROI is larger on real estate than any other investment.
Because houses past your primary residence are not taxed enough. Houses you own should be taxed at an exponential rate. Primary residence means you live there >80pct of the year.
Is there a limit to the size of your primary residence?
One million square kilometer!
The answer is very location dependent, and often multifaceted. However here in Canada it’s a combination of neglecting affordable housing construction for decades, a huge uptick in immigration raising demand in some areas, a total lack of political willpower (most of our MPs report housing income, many actual landlords), and an economy that’s over-leveraged on real estate in general.
I stayed at an Airbnb
Nothing funnier than source of the problem complaining about the problem :D
Think of inflation from monetary policy like lead in the environment. It takes time, but it all eventually ends up in the bones. Real property are those bones. 13 trillion dollars were 'created' during covid. Inflation (which i don't think is necessarily the right word to use, because it implies it can go backwards), takes time to get "into" the price of products, but products that transact faster, inflate faster. Property "inflates" on a relatively long time horizon, but its often very substantial appearing jumps because the transaction cycle is so long (typically 10+ years between transactions).
So maybe you've not bought a home, but try not to think about things in the absolute value of their price-tag, but rather in the monthly cost of the money to make the payments on the debt. At 2.5% interest, lots of people can afford a 500k house. At 6% interest far fewer can. If the seller re-financed at less than inflation, its literally more "profitable" to just pay the mortgage than to sell.
I see some others blaming air-bnb's. There is very little evidence for this. A few papers have found significant correlations, but the effect is so small relative to inflation that we should probably ignore it, and most of these papers are from a pre-inflationary period. Orders of magnitude more impactful is the fact that so many home owners were able to either purchase or re-finance at an extremely low rate in 2020/2021. Blaming Air-bnb's and ignoring the broader macro-environment in which all property sit is just extraordinarily lazy, reactionary thinking. Air-bnb's represent a microscopic number of actual rentals, and have been dropping in numbers for years.
mixture of housing supply shortage, empty homes, fucked investments, a bit of zoning laws, and nimbyism, and airbnb
housing supply shortage
younger generations want to live in cities because thats where both employment and "fun" is reletively speaking. the demand is very high for limited space.
empty homes
in some areas, there are homes that are completely empty, some due to negligence, inheritance and some just to artificially decrease supply. to put an example, San Jose, CA legitimately has more empty homes than it does homeless.
fucked investments/nimbyism
some people see housing as an investment instead of putting it into stocks. the investments keeps proces high because its seen as profit rather than a basic necessity to live. people who own houses will use all their power to prevent more houses to be built because more home lowers procing because of more supply.
zoning laws
some places, they restrict building to strictly residential or strictly commercial building. as WFH becomes more mainstream more land needs to be made as residential land. or remove the zoning alltogether
airbnb
airbnb gets you more money in popular areas. it takes away a potenial home for a local worker in favor for maximum investments, which is bad for the city, because it circumvents hotel taxes, and takes away potential income tax from someone who would have lived and worked in the area.
Prices are falling in Florida, and inventory is stacking up.
My home value hasn't started falling yet, according to Zillow, but the appreciation seems to have leveled off.
My guess is that as the need for housing has increased (population growth, short term rentals taking up supply, etc), we haven't been building the right kind of homes to fill the void.
Nobody is out there using land to build "starter homes". It's either large, expensive houses or apartment complexes, so the demand for home ownership is high, but the ones available to buy aren't cheap.
It would be like if nobody made affordable cars, so most drivers were stuck either leasing or saving up for a Lamborghini. (Hyperbole, but you get the idea)
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