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Economist explains why you can't afford a house anymore

Money & Macro2024-05-01
Economics#central banking#finance
99K views|2 months ago
💫 Short Summary

House prices have skyrocketed in countries like Canada, the United States, and Australia due to factors such as immigration, urbanization, and zoning laws. The housing crisis is attributed to construction failures, excessive speculation, and financialization. NIMBY opposition to new developments exacerbates the shortage, leading to unaffordable housing. Speculative housing bubbles, cheap mortgages, and liberalized mortgage markets contribute to the crisis. Solutions include increasing house construction, empowering national leaders to override NIMBY concerns, and implementing measures like underused housing taxes to prevent bubbles and make housing more accessible and sustainable.

✨ Highlights
📊 Transcript
Factors contributing to expensive housing prices in countries like Canada, the United States, and Australia.
02:58
Immigrations, urbanization, building material costs, and zoning laws all play a role in housing affordability.
The housing crisis is explained by construction failures, excessive speculation, and financialization theories.
Housing prices vary across countries and cities due to these theories.
Shortage of affordable housing due to lack of new houses being constructed to keep up with population growth.
NIMBY opposition to new housing developments contributes to housing shortages.
06:27
Economists propose empowering national leaders to override NIMBY concerns to address the crisis, as demonstrated in Auckland with successful zoning changes.
Contrary to popular belief, data shows that construction not keeping up with demand is not the primary cause of the housing crisis.
Countries with unaffordable housing often have increasing numbers of vacant properties, indicating housing as an investment affecting market dynamics.
Impact of speculative housing bubbles on housing markets.
10:56
Increasing prices attract speculators and drive further price hikes.
Positive feedback loop leads to a construction boom but fails to keep up with demand for investment properties.
Theory that houses are unaffordable due to a speculative housing boom and the role of cheap money, particularly low-interest rate mortgages, in driving house price inflation.
Dr. Collins' theory attributes the current housing affordability crisis to liberalized mortgage markets and resulting household debt.
Real house prices in advanced economies increased after reforms in the 1980s.
16:25
Anglo economies such as Australia, Canada, the UK, and the US experienced excessive house price increases.
Household debt in countries like the Netherlands and the US has started to fall since the crisis of 2007.
Houses have become more affordable since the 1980s due to lower interest rates.
Monthly costs for mortgages have significantly decreased compared to the 1980s despite higher house prices, indicating increased affordability.
Reasons for Unaffordability of Houses
20:16
Economic theories such as NIMBYs, housing bubbles, and cheap mortgages are discussed as factors contributing to the unaffordability of houses.
Increasing house construction is highlighted as a crucial step to address the housing crisis, with different approaches suggested based on country density.
The underused housing tax in Canada is proposed as a measure to prevent housing bubbles and ensure sustainability in the housing market.
Mortgage standards and their impact on debt and house prices globally are examined, emphasizing the need for a reevaluation to make housing more accessible and sustainable.