Housing Crisis

[RefluxSemantic]

Prices in the bigger cities here are ridiculous compared to other places, even if those places have all the utilities. And sure, there's limited space in a city like Amsterdam, but is that really a space issue? Or is the issue that too many people want to live in Amsterdam? And why is that so important?

As a city itself, its not worth the money. But for example for me, Im from Utrecht. Its where I have always lived and where my social life is. I dont care much about the city itself but I would appreciate living in the same area as my friends and family.

[Goodspeed]

That's rough since Utrecht is one of the most expensive cities
I do get it. I would also rather live close to people. But maybe for starters it's better to look in cheaper places. Buying anywhere at all is going to significantly improve your financial situation as opposed to renting, and down the line you will have amassed enough capital to move to Utrecht. 3 years ago when we went looking for a house we probably couldn't have moved to Utrecht, but now it would be an option just due to how much we were able to save

[princeofcarthage]

Prices in the bigger cities here are ridiculous compared to other places, even if those places have all the utilities. And sure, there's limited space in a city like Amsterdam, but is that really a space issue? Or is the issue that too many people want to live in Amsterdam?
I don't think people are spoiled by space as much as they are spoiled by location @duckzilla
We can probably choose between 150m2 in the middle of nowhere or 80 in a city. Most people choose the city.

Yes but it also depends on where in city. My sister leaves on 16th floor in a tower complex which has 12 something wings. If you walk from her building to main entrance of the society that alone will take you 2-3 mins. Nearest shop is at least 5 mins walking. If I want to get even some milk, I need to at least have scooter/bike or it is a ~ 20 min time sink. On the second hand where I live if I want milk I can go, buy, and come back in 2 literally 2 mins. I wouldn't want to live in her place no matter if its right in the middle of the city. The more sophisticated societies we build the more time we lose. Which is why a sprawling city is better imo even if less efficient cuz you can then have multiple city center concepts.

[Dolan]

@princeofcarthage Yeah, I was thinking about something similar. I had some ideas about creating new types of habitation that are neither city nor countryside, but something in between.
The problem with such a way of organising habitation spaces is that you lack the advantage of having services concentrated in one area, which is one of the advantages of living in a city.
Then you'd have to spread services in such a way that you'd cover a bigger habitation sprawl.
But some services don't lend themselves so well to this kind of dilution, for example hospitals. While shopping centers would have no or fewer problems getting adapted to this pattern.

[InsectPoison]

That's why this idea that we need to make sure we have growing demographics (ie, birth rates above replacement level, so >2.1 children/family) for the sake of keeping the GDP growing is bad, when that means making the housing situation an even bigger hell for a growing number of people.

If you aren't able to maintain a population then you are going to end up having a demographics problem like Japan. There will be too many old people and not enough workers to maintain pensions and a number of other things. Unless you maintain 2.1 children/family then you're just going to end up having an ageing declining population which requires immigration to keep it afloat.

[princeofcarthage]

Currency as we know is going to be irrelevant in short amount of time. 2035-2050 should see adoption of 3d printers in personal households. Experiments in China confirmed that creation of energy from nothing* is possible. Particle creator/modulator whatever you can will be a reality in few decades. That means you can create a cup of coffee as you see in star trek or The orville. That may take few centuries but atleast smaller things should be possible by the end of this century in personal households. Analysis suggests by 2433 currency as we know will be irrelevant on Earth.

[RefluxSemantic]

No matter how hard I try, I just dont understand why we need 2.1 children per woman to sustain population, rather than 2.

Population decline would be great though. There are too many of us. In EU that will happen when the baby boomers die

[Dolan]

That's why this idea that we need to make sure we have growing demographics (ie, birth rates above replacement level, so >2.1 children/family) for the sake of keeping the GDP growing is bad, when that means making the housing situation an even bigger hell for a growing number of people.

If you aren't able to maintain a population then you are going to end up having a demographics problem like Japan. There will be too many old people and not enough workers to maintain pensions and a number of other things. Unless you maintain 2.1 children/family then you're just going to end up having an ageing declining population which requires immigration to keep it afloat.

That's how things are conventionally thought right now. But maybe we need to rethink this.
What if we make great progress in automation and instead of needing more workers to have a similar GDP output, we increase productivity through automation.
I don't think the future must depend on infinitely growing both the population and the GDP. At some point, it becomes a hell for everyone involved.
We need to change tack, need to rethink our economic paradigm so that we don't need perpetual demographics growth to have an economy that works for (most) everyone.

[InsectPoison]

That's why this idea that we need to make sure we have growing demographics (ie, birth rates above replacement level, so >2.1 children/family) for the sake of keeping the GDP growing is bad, when that means making the housing situation an even bigger hell for a growing number of people.

If you aren't able to maintain a population then you are going to end up having a demographics problem like Japan. There will be too many old people and not enough workers to maintain pensions and a number of other things. Unless you maintain 2.1 children/family then you're just going to end up having an ageing declining population which requires immigration to keep it afloat.

That's how things are conventionally thought right now. But maybe we need to rethink this.
What if we make great progress in automation and instead of needing more workers to have a similar GDP output, we increase productivity through automation.
I don't think the future must depend on infinitely growing both the population and the GDP. At some point, it becomes a hell for everyone involved.
We need to change tack, need to rethink our economic paradigm so that we don't need perpetual demographics growth to have an economy that works for (most) everyone.

Automation is good and all but what happens to all those newly unemployed people?

[Dolan]

@InsectPoison If the population decreases and you replace the outgoing workers with more automation, would that lead to more unemployment?
I guess it's a question of proportions and speed of changes: how fast does the workforce shrink and how fast could automation pick up the slack.

[RefluxSemantic]

NL also offset some of the aging by delaying pensions. Pension age is now 67 rather than 65. Many EU countries have a pension age even below 65. It makes sense, people get older and older and people tend to be more healthy at 65 than before so its a necessary evil.

[Dolan]

@RefluxSemantic It depends on life expectancy stats.

Currently retirement age in Romania is gradually increasing to reach 65 for both men and women. Just like in the NL.
But the problem is that our national life expectancy is about 73, while yours is 80.5.
So people here would only benefit, on average, of 8 years of retirement money.
While in the Netherlands, they would benefit for 15 years, almost double the duration and state support.


You can see the graph here: https://www.google.com/publicdata/explo ... false&icfg

France is an extreme example, they have even higher life expectancy than you, but lower retirement age, 62. Macron tried to reform the pension system by raising the retirement age to 64, but he was met with an outpouring of street protests, which led to the gillets jaunes phenomenon. Recently he said he gave up on the initial plans of reform, since after the Covid crisis it's not realistic to increase the economic burden on a population already impacted by the crisis. Though, in reality, the reason he did this is because next year is an election year and he's polling too close to LePen, so he can't afford to enervate the French with these ideas to reform the pension system in the next two years.

[RefluxSemantic]

So reasonably life expectancy and retirement age should be linked. For NL 67 years makes sense.

[Horsemen]

Don't buy housing, it's risky and tax inefficient. Invest in stonks instead.

[princeofcarthage]

Imo if you aren't earning enough to retire at 40 and live life as you want till 100 it's pointless to live.

[Mr_Bramboy]

Don't buy housing, it's risky and tax inefficient. Invest in stonks instead.

Stonks are only tax efficient if you're not paying taxes.

[Goodspeed]

Don't buy housing, it's risky and tax inefficient. Invest in stonks instead.

The money you save from avoiding high rent costs easily makes up for that, at least here (and mortgage interest here seems similar to the UK). For us it's about a 10k a year difference, and we needed to "invest" about 5k to be able to buy. If I buy 5k worth of stonks, I wouldn't get 200% yearly ROI unless I went for meme stonks and got lucky. Seems more risky than buying a house ngl

[RefluxSemantic]

A house in my neighbourhood just sold for almost 1 million for 190 m². That's insane. 5000 euros per square meter lol. I guess a 60 m² appartment is apparently extremely luxurious. The market is broken.

EDIT: this is not even city centre or anything.. Just a normal house.

[Horsemen]

Don't buy housing, it's risky and tax inefficient. Invest in stonks instead.

The money you save from avoiding high rent costs easily makes up for that, at least here (and mortgage interest here seems similar to the UK). For us it's about a 10k a year difference, and we needed to "invest" about 5k to be able to buy. If I buy 5k worth of stonks, I wouldn't get 200% yearly ROI unless I went for meme stonks and got lucky. Seems more risky than buying a house ngl

You are still paying for your house even if you own it and have no mortgage. The equity in your home could be invested in something else. You could earn a 10% yield if you bought and held QYLD. Is that better than what you would save on rent from owning your own home? I'm not familiar with rental yields in the Netherlands but in London they are nowhere close to that high.

[RefluxSemantic]

Don't buy housing, it's risky and tax inefficient. Invest in stonks instead.

The money you save from avoiding high rent costs easily makes up for that, at least here (and mortgage interest here seems similar to the UK). For us it's about a 10k a year difference, and we needed to "invest" about 5k to be able to buy. If I buy 5k worth of stonks, I wouldn't get 200% yearly ROI unless I went for meme stonks and got lucky. Seems more risky than buying a house ngl

You are still paying for your house even if you own it and have no mortgage. The equity in your home could be invested in something else. You could earn a 10% yield if you bought and held QYLD. Is that better than what you would save on rent from owning your own home? I'm not familiar with rental yields in the Netherlands but in London they are nowhere close to that high.

Mortgage is generally lower than rent. And then after 30 years you've turned all that money into a home. Buying instead of renting is the best possible investment. I ran some broad numbers and with those numbers (decent income for 2 persons) you could buy a 500k house for ~1600 mortgage payment per month. 1200 rent gets you a ~200k appartment. So basically buying a house is just a way to save money.

Whether getting a second house is a good investment is a different matter. But your first house is always a good investment unless the house market crashes.

[n0el]

Not to mention that real estate (at least in the US) is the #1 driver of intergenerational wealth.

[Goodspeed]

Don't buy housing, it's risky and tax inefficient. Invest in stonks instead.

The money you save from avoiding high rent costs easily makes up for that, at least here (and mortgage interest here seems similar to the UK). For us it's about a 10k a year difference, and we needed to "invest" about 5k to be able to buy. If I buy 5k worth of stonks, I wouldn't get 200% yearly ROI unless I went for meme stonks and got lucky. Seems more risky than buying a house ngl

You are still paying for your house even if you own it and have no mortgage. The equity in your home could be invested in something else. You could earn a 10% yield if you bought and held QYLD. Is that better than what you would save on rent from owning your own home? I'm not familiar with rental yields in the Netherlands but in London they are nowhere close to that high.

Well, yeah, using all of your savings to pay off the mortgage isn't worth it. But owning a house in general is, because you're avoiding the insane rental costs.

Liquid capital needed for buying a house was about 5000 at the time we bought which was in 2018 (it was 8000, but 3000 of that we got back from tax deductions so it cancels out). Investing that 5000 in stonks, going with 10% yearly ROI, would've yielded 500 in the first year.

Mortgage interest payments are about 350 a month. In NL, you are required by law to pay off some of your mortgage every month as well, coming to a total of about 650 per month in mortgage payments.
Renting a similar space would cost about 1200 a month.

By avoiding rental costs, we are saving 1200 - 350 = 850 a month, which is 10200 per year. Now, yes, about half of that we are forced to use to pay off the mortgage, so your opportunity cost argument applies. But the other 5k could be invested into stonks, which would yield 500 in the first year again, coming to a total of 10700 of savings per year, compared to renting.

That's where the 200% figure in my previous post came from. That's about the yearly ROI we would've needed in the stonk market for it to have been worth it to invest that initial 5000 into stonks rather than a house.

Edit: I forgot the taxes. We're paying about 1000 in house ownership taxes per year so the total savings would be about 9600, not 10700

[Horsemen]

Show hidden quotes

Don't buy housing, it's risky and tax inefficient. Invest in stonks instead.

The money you save from avoiding high rent costs easily makes up for that, at least here (and mortgage interest here seems similar to the UK). For us it's about a 10k a year difference, and we needed to "invest" about 5k to be able to buy. If I buy 5k worth of stonks, I wouldn't get 200% yearly ROI unless I went for meme stonks and got lucky. Seems more risky than buying a house ngl

You are still paying for your house even if you own it and have no mortgage. The equity in your home could be invested in something else. You could earn a 10% yield if you bought and held QYLD. Is that better than what you would save on rent from owning your own home? I'm not familiar with rental yields in the Netherlands but in London they are nowhere close to that high.

Mortgage is generally lower than rent. And then after 30 years you've turned all that money into a home. Buying instead of renting is the best possible investment. I ran some broad numbers and with those numbers (decent income for 2 persons) you could buy a 500k house for ~1600 mortgage payment per month. 1200 rent gets you a ~200k appartment. So basically buying a house is just a way to save money.

Whether getting a second house is a good investment is a different matter. But your first house is always a good investment unless the house market crashes.

You are also risking your savings on a highly leveraged and illiquid investment that would get wiped out if the housing market took a dip. And that's before the £000s in transaction costs and stamp duty - if I were to buy my current flat I would pay 6 months' worth of rent on stamp duty alone, and that's with the stamp duty holiday.

[Horsemen]

Show hidden quotes

Don't buy housing, it's risky and tax inefficient. Invest in stonks instead.

The money you save from avoiding high rent costs easily makes up for that, at least here (and mortgage interest here seems similar to the UK). For us it's about a 10k a year difference, and we needed to "invest" about 5k to be able to buy. If I buy 5k worth of stonks, I wouldn't get 200% yearly ROI unless I went for meme stonks and got lucky. Seems more risky than buying a house ngl

You are still paying for your house even if you own it and have no mortgage. The equity in your home could be invested in something else. You could earn a 10% yield if you bought and held QYLD. Is that better than what you would save on rent from owning your own home? I'm not familiar with rental yields in the Netherlands but in London they are nowhere close to that high.

Well, yeah, using all of your savings to pay off the mortgage isn't worth it. But owning a house in general is, because you're avoiding the insane rental costs.

Liquid capital needed for buying a house was about 5000 at the time we bought which was in 2018 (it was 8000, but 3000 of that we got back from tax deductions so it cancels out). Investing that 5000 in stonks, going with 10% yearly ROI, would've yielded 500 in the first year.

Mortgage interest payments are about 350 a month. In NL, you are required by law to pay off some of your mortgage every month as well, coming to a total of about 650 per month in mortgage payments.
Renting a similar space would cost about 1200 a month.

By avoiding rental costs, we are saving 1200 - 350 = 850 a month, which is 10200 per year. Now, yes, about half of that we are forced to use to pay off the mortgage, so your opportunity cost argument applies. But the other 5k could be invested into stonks, which would yield 500 in the first year again, coming to a total of 10700 of savings per year, compared to renting.

That's where the 200% figure in my previous post came from. That's about the yearly ROI we would've needed in the stonk market for it to have been worth it to invest that initial 5000 into stonks rather than a house.

What's your LTV? What would your return have been if you applied equivalent leverage to stonks?

3000 of tax deductions is generous, we don't really get that here.

[Goodspeed]

Show hidden quotes

Don't buy housing, it's risky and tax inefficient. Invest in stonks instead.

The money you save from avoiding high rent costs easily makes up for that, at least here (and mortgage interest here seems similar to the UK). For us it's about a 10k a year difference, and we needed to "invest" about 5k to be able to buy. If I buy 5k worth of stonks, I wouldn't get 200% yearly ROI unless I went for meme stonks and got lucky. Seems more risky than buying a house ngl

You are still paying for your house even if you own it and have no mortgage. The equity in your home could be invested in something else. You could earn a 10% yield if you bought and held QYLD. Is that better than what you would save on rent from owning your own home? I'm not familiar with rental yields in the Netherlands but in London they are nowhere close to that high.

Mortgage is generally lower than rent. And then after 30 years you've turned all that money into a home. Buying instead of renting is the best possible investment. I ran some broad numbers and with those numbers (decent income for 2 persons) you could buy a 500k house for ~1600 mortgage payment per month. 1200 rent gets you a ~200k appartment. So basically buying a house is just a way to save money.

Whether getting a second house is a good investment is a different matter. But your first house is always a good investment unless the house market crashes.

You are also risking your savings on a highly leveraged and illiquid investment that would get wiped out if the housing market took a dip. And that's before the £000s in transaction costs and stamp duty - if I were to buy my current flat I would pay 6 months' worth of rent on stamp duty alone, and that's with the stamp duty holiday.

What would happen to your monthlies though? I just can't imagine it's financially a good idea to continue to rent, if the situation in the UK is at all comparable to here.