
The Economist house-price indices - IshV
https://www.economist.com/blogs/graphicdetail/2018/02/daily-chart-5
======
cwal37
Chicago is so ridiculously cheap compared to the rest of the very small group
of "large american cities with big functional public transit networks." Never
thought I'd really consider moving back home, but that's definitely something
I didn't appreciate growing up.

Given the lack of geographic constraints, it's amazing how expensive the DC
area is. In % terms since 2000 it looks like only SF has exceeded it out of
the big cities. NYC had a lower increase, and Seattle is only just now getting
to a similar level. I hate looking for housing here.

~~~
nugget
Part of what's keeping Chicago home prices low may be a relatively high
property tax that's predicted to increase in the near future, in order to
stabilize underfunded pensions.

There was an interesting discussion on HN about a year ago about the Greek
debt crisis and how the Greek State had effectively increased property taxes
to 6%+, to the point where prices cratered and the re-sale market in some
areas froze up. I think the catalyst for the discussion was an article about
heirs refusing to inherit certain properties because the hassle to sell, and
upkeep costs in the meantime, just wasn't worth it. It made me appreciate that
if things get bad enough, governments have a legal and fairly accessible
mechanism for confiscating a large portion of the property wealth held by
their citizens.

~~~
api
I do not expect the pension to last. It seems like a failed socioeconomic
experiment. Corruption and mismanagement play a role for sure but the big
killer is increasing life spans coupled with declining fertility. With 1.5-2
kids per couple and an extra 20 years of retirement the math does not work.
The only thing that could save it is crazy economic growth but that is
unlikely.

~~~
onlyrealcuzzo
Exactly. It might not sound like a big deal if life expectancy increases from
70-75. That's only a 7% increase!

But, when the retirement age is 65, you're retired for TWICE as long. That's a
huge difference. Either pension contributions need to increase AT LEAST two-
fold, benefits cut in half, or retirement age is always set at life-expectancy
- 5 years.

Not to mention, somehow now 62 is the new 65. Making the problem almost
3-times as bad.

~~~
jamesblonde
You'll be fine in the States. Life expectancy is decreasing -
[https://edition.cnn.com/2017/12/21/health/us-life-
expectancy...](https://edition.cnn.com/2017/12/21/health/us-life-expectancy-
study/index.html)

Meanwhile, in the rest of the civilized world, we are increasing pension age,
replacing defined benefits pensions with defined contributions, and lots of
micro effects. The pension system is, of course, workable. It just needs
adjusting to longer expected lifespans and, of course, increased funding from
people of working age.

~~~
lotsofpulp
No, the incentives of taxpayer funded defined benefit pensions (lifelong
annuities for worker and spouse) are unsustainable.

Problem 1 is the inability to forecast 30 years into the future, problem 2 is
the people whose money is being spent (future taxpayers) aren't in the
decision making process.

Problem 3 is low voter turnout among non government employee populations, so
politicians do whatever they have to make sure government employee unions vote
for them.

Problem 4 is no requirement to actually provide accurate funding, because the
costs will be understated in the first place (see problem 3), and the
liabilities are far into the future so money will be diverted for other
pressing matters.

If you think the above is not correct, all you need to do is look at the
funding status for all the taxpayer funded pensions in the US, conveniently
exempt from the rules that privately funded pensions have to adhere to (which
made them disappear because it turns out they're too costly).

However, as long as the US can print money (I.e. have a powerful military),
then they can inflate away all these debts the taxpayers have so just try to
make sure your assets are inflation resistant, preferably in high cash flow
businesses with barriers to entry that can sustain price increases.

~~~
jamesblonde
You didn't read what I wrote. My first point was the defined benefits are
already phased on in the rest of the developed world. Your other points do not
address the main point of whether the US can afford to pay pensions. Of course
it can. Countries like Italy still survive, even while funding 25% of people
in the old system (defined benefits).

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gervase
Are there any well-known theories that explain these disparities? I was quite
surprised by the nearly-flat cost of housing in Germany (relative to
inflation), for example. Is this a product of legislative, economic, or
cultural differences?

~~~
branchless
German banks lend against productive endeavor, shunning the Anglophone rentier
behaviour:

[https://www.youtube.com/watch?v=qpq2eqz6mR0](https://www.youtube.com/watch?v=qpq2eqz6mR0)

They also make land available to build on, unlike former UK colonies which all
use a combination of zoning to suppress supply and loose credit to increase
bidding levels.

All former UK colonies have land bubbles.

~~~
ianai
RE value is all about location and all factors related therein. Ie everything
from local legal factors through to view and relative scarcity. RE in
constrained places will always have a higher price/sqft than less dense
places. The markets also somewhat ensure all the other costs of RE (ie
building components like steel, wood, and labor) cost around the same from
place to place. But land can’t be arbitrated between localities.

------
jimrandomh
This says the price of mousing in SF has only increased by 78% since 2000. I
spot-checked that, and the first alternate source of data I could find,
[https://www.paragon-re.com/trend/san-francisco-home-
prices-m...](https://www.paragon-re.com/trend/san-francisco-home-prices-
market-trends-news) , says the increase has been much larger.

~~~
caseysoftware
It looks like the Paragon data is nominal dollars but the Economist adjusted
to account for inflation. If you flip the Economist chart to nominal dollars,
it's a +158% difference, so that's a good chunk of the difference but not all.

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acd
Also see the Herengracht index long term housing index which tracks housing
prices on the central canals of Amsterdam.

[https://hotelivory.files.wordpress.com/2010/08/herengracht21...](https://hotelivory.files.wordpress.com/2010/08/herengracht21.jpg)

[http://www.personal.psu.edu/bwa10/House%20Prices%20and%20Fun...](http://www.personal.psu.edu/bwa10/House%20Prices%20and%20Fundamentals%20On-
line%20Appendices.pdf)

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binarymax
The cost of the actual home is only one third of the story. The other two
thirds being interest rate and property tax. I'd love to see an analysis with
those other variables.

~~~
onlyrealcuzzo
I've forever wanted to see this, and I'm not sure if I just suck at searching,
or if no one does this.

It doesn't seem like it should be /too/ hard. I mean, property taxes are going
to be different in different regions of each country, but getting a rough
average shouldn't be too hard. And it's not too hard to get interest rates for
countries for the past 20-ish years.

~~~
davidgay
The problem is that you don't have to just find two numbers (interest rate,
tax rate) for each location and year. You have to account for:

\- different approaches to mortgages (fixed term vs not, different typical
terms, etc)

\- extremely different tax regimes (e.g., Switzerland has no property tax,
does have a wealth tax, and adds to your income an estimated rental cost for
the property)

And now once you've gathered all of that data, you get to figure out how to
make it all comparable :)

~~~
onlyrealcuzzo
Great point -- but by taxes, I meant to include all that stuff. I guess that
could get really tricky over time, since Switzerland--I'm guessing--introduced
these laws within the last 30 years. But given that the economist article only
covers like 30 countries, it doesn't seem like it's that much work. Maybe I'll
take a stab at it.

Comparing them is a good point as well. The economist article doesn't go far
enough in my opinion.

I'm interested mostly in mortgage payment vs rent. And mortgage payment vs
income (after taxes).

Even income after taxes is a little tricky. Not sure if they're are any
countries with REALLY high sales tax, but things like that could be worth
considering.

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aphextron
I have a theory that real estate remains the only undervalued asset class left
in the US. All of the attention has been in the stock market over this
economic cycle, and people are likely still scarred from '07\. Sure the
housing market has gotten insane in the Bay Area and a few other large metros.
But outside of that there are crazy deals to be had right now.

~~~
kolbe
Can you give us some examples of these 'crazy deals' and articulate fully why
they are in fact 'crazy deals'?

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ggm
Fantastic. I'm sharing this far and wide. I knew my economy was nuts, this
proves what a unique blend of nutty economies I'm part of. AU outranked by NZ
for outrageous house price inflation! who knew? Ireland is looking good right
now. All that GFC lunacy paid off in a huge housing stock I guess.

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WouterZ
Netherlands, housing market so screwed up that it'll cause braindrain...

~~~
onlyrealcuzzo
What's wrong with Netherlands? From my understanding, it's one of the most
affordable European countries for housing.

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curiousgal
Tangent: Are there any good resources for learning D3.js. Most of the things I
found online were basic.

