Cost of Housing and Housing Shortage

If you want cheaper prices, I would say you would have to wait about 40 years then there will be a whole lot less demand. Although old folks home will be in high demand.

In many markets there are an excess of homes and partially developed lots remaining from the speculation of the housing boom. I would not expect housing price to exceed those of the previously overinflated market prices anytime soon. It is just business interest trying to drive more confidence and speculation, and regain their profits, that promote claim of a resurgence in the housing boom. Additionally, with Baby Boomers in there 60's now, I would expect to see a decline over the next 20 years in housing demand, as there will be fewer many people to own homes. Keep in mindthe previous housing speculations drove the market values up to 3 or 4 times their value over a period of 5 years, and only declined values back like 10% or less. So the market is still profitable, just not a free for all where any idiot can make a million by flipping homes. also as the Baby Boomers retire you will likely see a decline in the overly speculative investments as they start having more fixed incomes with more limited investment abilities. Currently, they are approaching retirement and trying to make up for lost retirement savings from earlier in their lives, this drives a highly speculative and questionable investment behaviors that overinflate the various market sectors (The i heard a rumor investment process).

Plz note location is UK, not US!

No offence, but why would someone from the states know more about the UK housing market, then someone from the UK. I think most people here are simply trying to give an idea of the cause of high prices through what they know in their area. If you want to know what is happening in the UK, go for a walk and talk to some real estate agents in your city.

RCE, there will be a whole lot less people in 40 years...at least in the developed world. Considering the death or relocation to nursing homes of the baby boom generation, there will be a whole lot less demand. Isnt it like 1/3 less or huge like that.

*OFF-TOPIC*

There will also be some interesting changes too, since I think many of that generation will not want to leave their home and will want to stay in their home. So i predict that there will be a rise in home additions, gardeners, in-home nurses and people who will do your grocery shopping for ya. Not to mention the effect of high oil prices (or the complete lack of oil in 40 years) will have on the foot print of a city. I think demolition companies will do well too

Yes right now the Baby Boomer Generation would represent about 1/3 of the 1st world population, however, in 40 years considering the slow exponential decay for the deaths births and immigration that could be fully absorbed plus some. Initially as you see a decline in working populations there will be a subsequent increasing in immigration to provide support services to the elderly population, and labor for other fields that have lost substantial labor. Additionally, the vast majority of that generation will die much sooner than 90 to 100 years old. The mean life expectancy is in the 70s. Also, those who have the countries wealth will need labor forces to prop their wealth up, or lose it to inflation and advancing nations (or invest the majority outside the nation). There will be an impetus for immigration from outside to maintain a level of service. As people start to die off, there will be more immigration to fill the vacancy created, likely from countries with continued over population demands placed on their resources. So figure about 75 years from 1955 would be the mid point at which things transition. That would be about 22 years from now. The mid point for die off in the much smaller Gen X would be in about 40 years.

Right On The Mark -- You can not offend someone from California, so don't worry about that.. By the same token, I don't believe you can tell them anything.. After all, California invented the artificially inflated housing market years ago !!

Wait, I thought everyone moved out of CA to Washington, Oregon, Nevada?

Am I wrong?

Actually, everyone seems to be moving in from all over the country. A huge number of US immigrants seem to come from the south and midwest. It is just the racist, rednecks, environmental activist who are always complaining that they are moving (and they almost never seem to move). Washington is not one of the preferred states though. Idaho would be the first choice of the rednecks and racist, and Oregon for the environmental activists and racist. Everyone I ever met who moved to Washington or Nevada did so because they could not earn a living in Coastal California, so they move where rains constantly, or the summers get over 115 f and it almost never rains. A long time ago Pheonix was the place to go look for work when you could not make a living, then in the 1990s it was Seattle, here recently it has been LV.

Actually, I believe New York City had artificially inflated Housing, for prestige, long before California (actually even before the United States). Land and housing market speculation and manipulation is very old, it even occurred in the Roman Republic.

It's called the law of supply and demand and it tends to sort itself out.

Nobody is going to increase the price of a new home they just built when there are more houses for sale than people to buy them.

Move to Houston. $100K (~70K Euro) will buy you a real nice house here.

Hi bhankiii

Who do you think would want to move to a backward state like TX. Just joking It is actually amazing.

It means I could sell my house in a relative cheap and backward SA and buy 2 houses in Houston with some change. What is the catch?

You'd have to get past your funny accent.

Sounds great, but I was really referring to the House prices in the UK, as this is where my Familly and I live-but unfortunately in rented Accomodation as I cannot get Planning for my Land which is where I would be building our Familly Home and a number of starter Homes.

Regards

Charlie

as I cannot get Planning for my Land

This seems to be where the problem rests. Surely you cannot expect the local building Authority to allow the dwelling construction to go forward without proper permits, plans, code compliance, etc.

Please share with the forum the reasons why you "cannot get planning for my land".

Are you suggesting that waivers from local code be granted? Something else? Perhaps you are appealing for some type of hardship exception to local codes and ordinances? It is not clear to CR4 what is going on here.

In the USA, former President Jimmy Carter instituted a "habitant for humanity" program to address this problem. Google that for details. Perhaps something similar could be done in your location.

Codes and zoning are generally put in place to protect people who "can get planning" from those who "cannot get planning". When such is not the case, building cost are less (Houston, Texas is an good example as others have noted).

The dude's in UK. Second notice. He is not in CA! Stop hijacking the dude's thread.

So you are suggesting that somehow planners are civil servants in the UK, as he implied, but they are something different in California. For the most part, planning, building departments and public works are civil servant jobs in any 1st world country, I don't think this is something specific to just the UK. Also set asides are typical world wide, the agricultural policies i based my discussion on are derived from federal government policies across the US, not California, that originated during the Dust bowl and 1950s (just expanded across the world since then). Also, I do not think the basic economics of housing markets really differs that much in the 1st world, it is a issue of perceived supply and demand. Adding more supply when the demand has declined and there is a perceived excess of supply doesn't usually promote more demand. I am surprised however that you could believe the basic principles of economics and agricultural management vary so dramatically regionally.

Also as an unidentified "guest" i am trying to understand what do you mean by Second Notice. Who are you, I can not tell, since there are so many anonymous people who log in looking for easy answers to complicated issues, seeking psychological support for very poor construction decisions, to promote their agenda for developing new unfounded markets and market some product, lobby for political change that favor their acquisition of wealth on some get rich quick schemes, etc..

RCE spake upon us thusly:

"basic economics of housing markets really differs that much"

Reply:

Differ that much

May or may not. I haven't heard much about situation in UK. It's been all about CA. Everyone knows about CA. I was hoping to learn about the UK situation so that I could decide whether these cases "differ that much" or not at all.

Did UK experience a sub-prime loan problem similar to USA? We will never know. The thread has been hijacked.

You claim both areas are considered part of the "1st world". But you also seem to feel that "red-necks", and people from southern and mid-western USA are inferior to those who are native Californians. Some bias going on here. My guess is that you may be an angry native Californian. Am I correct? Probably not as there is no such thing.

Then you link up by highlighting the "agricultural" connection. Next, off we go to the dust bowl policies of 1950. Did UK have a drought? BTW, the dust bowl was 1930's.

Let's hear some comments that are at least a wee bit related to the question asked.

Actually i would guess that you are somehow unhappy with California, as you seem to attack with very little substantiation any general statements from someone from california as not applicable outside of California. Almost like you believe we have different federal laws and agencies, and general economics applies differently. A couple of things you might consider, there are many red necks in california who are native and they usually want to move to northern california, oregon or idaho. I am not sure what people from the south and midwest have to do with anything except that they are a large part of the internal immigration, other have made similar statements regarding people moving to California from the midwest. My grandparents, and everyone in my family from that generation actually all moved here from Oklahoma, Arkansas, and Nebraska, so i know of the emmigration from those areas and their reasoning. Obviously they do not move because the cost of living is cheaper. But the prospect of earning a better easier living has been a draw since 1840s, even though it may not be true since the cost of living has always been higher. People earn more, ye, but they also pay more.

Failure of Sub prime loans was not a driving force for the housing market decline, an excess of supply that began to exceed the demand lead to the housing crisis. The crisis with Sub-prime loans was a consequence of bad banking investments prior to the market decline that were effected by the market decline, and in theory adversely impacted the market recovery. Also, technically, California was one of the lesser hit states, compared to Florida, Arizona, and Nevada (way less impacted than Nevada and Arizona). No matter where you are you just can not sell more homes than there are buyers who can buy the homes. I do not think this is exclusive to California.

The agricultural policies i indicated were from the dust bowl and the 1950s, not from the dust bowl in the 1950s. The reason for many agricultural policies derived in the 1950s has to do with proliferation of mechanized agricultural practices and water distribution systems during post WWII. The policies i mentioned however, are federal policies, again, and in the 1950s there was a propigation of US initiated agricultural policies and practices through out much of western Europe. Keep in mind many of the agricultural issue of the Dust Bowl were from mismanagement of agricultural resources, and policies and federal agencies were established because of these mismanagements.

And, the concept of public agency staff being civil servants is not unique to UK, nor are there practices. There is a reason for the use of civil servants, private industry is driven almost purely by priofts and this does not consider the benefits of the community they serve, but their own profitability. Civil servants are paid directly by the community to serve the general community, and do not have to consider their departments profitability over public health, safety, living conditions, etc... BTW the bureaucracy and civil service as we see it now is not something dramatially different in the US and the UK, it all is derived from the english policies that go back to at least the Norman administration of goverment in England and the Romans.

Oh my. I really made you type a bit. Thank you! Since you now have redefined the term "red-neck" to include Californians as well as those from the southeastern states (of the USA), I will retract my concerns of "elitism" on your part.

But, still not adressed by the forum is this:

What do we need to do to achieve affordable Housing without destroying our existing Housing Market.

By "our existing housing market", I assume he means the "UK existing housing market".

Notice that within this context, I have taken what economists call a "micro-economic" view (as opposed to "macro-economic" viewpoint).

RCE, correct me if I'm wrong. You are of the opinion that the "micro-economic" conditions that are cause for concern to "Charlieakestraw" are more similar than not to those found in coastal CA.

Reasons are that in both micro-economic conditions, there are bureuacrats, that both are from what you call the "1st world", and that both are from "agricultural" areas of their respective micro-economic conditions.

Or are you instead saying that this problem is macro-ecomomic in scope (apart from any restrictions that you may have imposed such as listed)?

Again, and for the last time, I would like to hear more directly from "Charlieakestraw" or others with knowledge of his particular zoning issue.

Specifics. What exactly is it about his specific situation that is causing him to conclude that he cannot:

"achieve affordable Housing without destroying our existing Housing Market"

I'm wondering why he asked this question. Are there some specifics in his micro-economic condition that need to be overcome (zoning, population density, building material costs, infrastructure, politics, public policy, etc.)?

That is what I would like to learn more about. Not the specifics of your micro-economy or my micro-economy (because I already understand those), but his specific problem.

In other words as the lawyers say, "the devil is in the details". What are the details?

I am not sure where you came up with the idea of rednecks being from the southeastern US, this implies some underlying preceptions of your own. I have done a number of projects in the Southeast, and some areas I have found have some nice aspects. I liked visiting atlanta on some federal projects, though i hear it gets worse there in the summers and I would not have liked the humidity. Microeconomics are good to evaluate how much a community will dampen or amplify the much larger market effects, but because of international banking, there is always a ripple effect from the larger economies throughout all others that are linked. I would suggest you ask a specific question about local issues, or even site issues as these are a factor too, like local environment and climate, soils, flooding, streams and drainage. Site specific issues such as soils and flooding can have a much more significant effect than public policy on a specific developments cost. Eventually you can become bogged down in the minutia, since local factors just modify some percent of the overall trends. About 7 pm you should be able to watch BBC, as I do, and you will see how much of a factor US market trends have on UK markets, and would likely be surprised. I think you might be surprised to find out how much planning and building policies and codes more similar than different between local communites based on community affluence and degree of regulatory corruption, versus a comparison of states and Nations. The communities affluence within the boundaries of the community is more of a factor. Also, I am not from a coastal california community, I just have worked as a Civil Engineer all over the US and have to do many projects in coastal California. I am from inland california, that is the part where the mean summer temperatures stay above 100 and there is constant smog.

"achieve affordable Housing without destroying our existing Housing Market"

The potential is huge when redeveloping (keep the trees) existing housing developments and/or older neighborhoods. In effect creating improvements to older existing blocks by clustering lots together. Allowing homes with 1/2 acre or more where they were 150'x75'.

Hi Charlyrakestraw

Add cost of labour to your list. I don't think workers and trade unions will agree to smaller wages.

We could build smaller houses. I'm not sure why a family of 3 needs 1800 square feet for a starter home.

To show status...even though they probably can't afford it.

Depends upon perspective, some want to start and stay retaining one mortgage rather than grow resell, move up acquiring another house and paying again for leverage.

Darned if I know! I'd be happy to buy the house we are in now, but the landlord won't sell because the current valuation is less than he has in it (purchase price plus renovations, it's 35 years old but good as or better than new). He doesn't want to lose money, and I'm not hard pressed to understand THAT!

If looking at this issue from a replacement cost scenario the valuation increases significantly. This may partially explain the owners considerations.

Presently you will probably need to wait until the planners and inspection entities resolve the issues surrounding uses of non-traditional building materials.

What inspection and planning agencies? What materials? How much would these impact the cost of a home?

What inspection and planning agencies?

Civil servants...

What materials?

Other than steel, concrete, stone, brick, block or solid wood products.

I might not have been clear before. Let me clarify, specifically what inspection agencies are you implying need to resolve some issue regarding non-traditional building materials? What non-traditional building materials are you talking about (versus, which materials that you consider part of traditional building materials)? and how does the use of these non-traditional materials substantially impact the cost of housing for the homeowner? Another question might include how does the use of these materials conform to requirement for safety of homeowners and construction quality control? and, since we had a training discussion today regarding the comparison of different pipe materils and dissimilarity in testing procedures, another question might be how do the materials compare with traditional materials under similar consistent testing?