Durning: “I think your younger readers would appreciate this one.”
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Watching house prices and the overheating housing market in the UK, it’s difficult not to feel the same wilful refusal to accept the facts is at play here. Unless wages are rising too, house prices leaping tens of thousands of pounds every year mean mortgages are unsustainable and increasingly unobtainable.
The government realises this, hence the sticking plasters of help-to-buy and starter homes, to try to help a few households onto the housing ladder without affecting house prices and profits from housing. The Bank of England knows this, hence Mark Carney’s repeated warnings about the state of the market, and refusal to raise interest rates – a move that would imperil people just about meeting their mortgage obligations now.
The tension in The Big Short comes when the viewer realises that for the heroes – those betting against the housing market and exposing the lie at the centre of the subprime bubble – to win, people will suffer. They’ll lose their houses as they default on their mortgages, or their landlords have their homes repossessed.
The same is true in the UK: there is no possibility that the housing crisis has any solution that is casualty-free. If house prices continue to rise, fewer people can afford homes. If the bubble bursts, more people become homeless after being saddled with huge mortgages. Even if the market remains static, homelessness remains a problem, and lack of access to social housing puts many households in financial precarity.
Full column here.
For your amusement, a close friend put a bid on a property in West Vancouver this month. His bid was $270k over the asking price. The winning bid was more than a million dollars higher than that. 60% over asking price. 18 bids.
With such a massive commission it may be a surprise if the agents would have considered shadow flipping. Then again ……
This was my thought about last week’s City Conversation about Affordability … Most of the talk was about buying, as if here too, that is forever to be the only choice.
If the only way to make things significantly is to more affordable is to make things smaller (as all things being equal, housing is a $ per sqf thing), we run into the scenario that we try to determine how many hipsters fit on the head of a pin … An interesting exercise philosophically, but with little practical benefit. A UBC student MIGHT be able to live in a Nano-house, but few families could! (Or they could, but then it would be called camping, and few families do for a long period of time)
What’s the end game with this? Monks already figured out how many angels can dance on the head of a pin … Do we really need to start checking their math?