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Re: while I partially agree...
Posted by Reality (more from Reality) on Fri, 26 Nov 2010 13:10:00
In Reply to: Re: while I partially agree..., James, Fri, 26 Nov 2010 12:15:02
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Don't get me wrong, I actually think there is still some room left upward, perhaps another 10% or whatever in price rise with a declining volume as background, in Canadian and Australian real estate market, as all the government-enabled shenanigans like witholding land releases, buyer encouragement, etc. take place enabling the last rounds of bonuses at the mortgage-lending complex. That's how bull traps are formed: a final spike upward with declining volume. The rising global commodity prices will enable that last leg in Canada and Australia, before interest rate rises and kills borrowing capacity.
The big drop will come after that. It only takes a 50% drop to wipe out a 100% previous rise :-) Property tax rate above 1.5-2% is more than a minor annoyance in an environment where interest rate is less than 5%; it's 1/3 of total monthly payment! Canadians' general laid back tolerance of taxation, with a faith in the correlation between prices charged by monopolies and services provided by the same monopolies (instead of recognizing monopolists tending to enrich themselves and aggrandize their bureaucratic reach at the expense of hapless monopolized client base), will allow that burden to grow to an even more excessive proportion before it is reined in.
$6mil+ houses certainly have more than 2-3 times the square footage of normal houses. What makes a house expensive beyond the first $200k or so often has little to do with square footage. Location, vista and land quality are much more important. A 2200sqft 4br modular home costs only about $80-140k to get built and shipped to site in most parts of North America; a septic tank for a 4br house costs about $10-20k on most buildable lots. The rest of the home price is actually resulting from the artificial restriction on supply provided by zoning rules and existing owners' holding out for higher prices before selling. There is hardly any detached single family house in the inner core of Boston, except for the really run-down parts where houses went to $300-400k or so during the bubble peak and now are under $100k and largely boarded up. The tonier parts of the city core are practically all town houses and condos. Aside from the "professor row" around Harvard campus, the nicer detached single family homes are all in the low-population towns near the innermost beltway, outside the city limits along the edge of the metropolitan area . . . probably due to the school-busing rules in the 60's.
I can certainly agree with you that house prices do not affect owners who do not need to sell and have no intention of borrowing against equity (aka second mortgage, which used to be a perjurative expression). Housing prices going down (all else being equal) is actually a good thing for the community. Home owners would then be less in hock to the banks, which are essentially collecting a tax on home-debtors' very existence. With that "existence tax" or rent on money (instead of rent on house) reduced, the people would have more resources to participate in the local economy. Property taxes going down with home price would also reduce the bloated and busybody government.
posted by 96.233.42...
Posts in this Thread:
- Alright you Canadians, No Snaab, Wed, 24 Nov 2010 20:51:19
- I thought this would be about two Thanksgiving holidays, MI-Roger
, Sat, 27 Nov 2010 10:54:30 - what gives? low interest rates ..., Trev, Thu, 25 Nov 2010 14:10:21
- Echo bubbles, Reality, Thu, 25 Nov 2010 09:51:35
- while I partially agree..., James, Thu, 25 Nov 2010 19:04:42
- Re: while I partially agree..., Bill Homer
, Fri, 26 Nov 2010 07:46:32 - Re: while I partially agree..., Reality, Thu, 25 Nov 2010 20:27:19
- Re: while I partially agree..., James, Fri, 26 Nov 2010 08:32:49
- Re: while I partially agree..., Reality, Fri, 26 Nov 2010 10:16:04
- Re: while I partially agree..., James, Fri, 26 Nov 2010 12:15:02
- Re: while I partially agree..., Reality, Fri, 26 Nov 2010 13:10:00 <-- Viewing This Message
- buyer encouragement..., James, Fri, 26 Nov 2010 16:41:53
- Re: buyer encouragement..., Reality, Fri, 26 Nov 2010 18:17:47
- left vs right, James, Sat, 27 Nov 2010 09:02:34
- Multi-Dimensional, Reality, Sun, 28 Nov 2010 17:45:48
- balance + the Nolan chart, James, Mon, 29 Nov 2010 08:58:56
- Re: balance + the Nolan chart, Tim, Mon, 29 Nov 2010 19:18:09
- I'll guess I'll bite one last time I guess..., James, Tue, 30 Nov 2010 03:53:50
- I was listening to the same NPR segment on Monday, Reality, Thu, 2 Dec 2010 22:42:27
- a different angle..., James, Sun, 5 Dec 2010 03:50:31
- NPR?, James, Sat, 4 Dec 2010 15:07:16
- Re: NPR?, Reality, Tue, 7 Dec 2010 15:30:17
- Re: NPR?, James, Wed, 8 Dec 2010 11:36:49
- Re: Alright you Canadians, James, Thu, 25 Nov 2010 08:39:28
- Re: Alright you Canadians, JohnA
, Thu, 25 Nov 2010 07:43:14 - Re: Alright you Canadians, gilbertb, Thu, 25 Nov 2010 07:15:06
- Same down here in Australia..., sab, Wed, 24 Nov 2010 21:32:32
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