One day, when robots build houses, owning can replace renting. Or when everyone stops the cargo cult of HOUSES MUST GO UP IN PRICE OR LIFE SUXORZ!!!
It's funny how owning something distorts ones perception. What else in the world MUST GO UP IN PRICE! Notice I say price and not value, for it is truly only the price going up. Their utility remains static, or decreases as the view is blocked by high rises.
Paperclips must go up in price! I own some!
Here in the UK, at least in the south/east where the jobs are, monthly rents tend to be the same order of magnitude as monthly mortgage payments on a 25-year loan for a home of the same size in the same location.
The choice therefore is not between low rent or high purchase cost; it's between making about the same payment for 25 years then never again, or making it for your whole life (while your landlord keeps it for their nest egg).
Since you have to live somewhere, if you are able to get a loan at all, and barring expectation of massive disaster, buying seems to be a no-brainer.
Two things could change that equation. We could add vast numbers of rental properties to the market, enough that the competition forces down rent prices by a very significant amount. The private sector is certainly not going to shoot itself in the foot in this way, and conservative UK governments have been pushing hard in the other direction, so this seems unlikely.
The other alternative would be to reduce the need for homes in expensive places by having more people live together, in cheaper areas. We're seeing this happen by default now as young people are priced out of the market, but widespread telecommuting has the potential to make this a plausible deliberate choice rather than a forced decision.
No idea how the US situation compares, natch
> No idea how the US situation compares, natch
Speaking as a US citizen in a small midwest city, it's basically the same in most areas.
I can rent a 2bed/1car/700sqft apartment for (X) dollars per month. Or I can own a 4bed/2car/1800sqft single-family home for the same (X) dollars per month, on a fixed 30yr mortgage.
The main difference (besides the tons of extra space) is that the apartment is guaranteed to cost 5-15% more every single year for life. But the house mortgage payment only rises maybe 1% each year.
If I leave an apartment, I have to pay them one or two thousand dollars (on top of any rent owed). If I leave my house, it's equity usually covers any realtor listing fee and gives me a few thousand to cover moving expenses.
I hate home ownership, and no one really does condos in my state, so renting is the only other option. But I can do basic math. Even if we move every four years, it's still much cheaper to own rather than buy, in most situations.
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Every single person and organization in the entire nation, is doing everything possible to inflate housing costs as high as possible, in literally every market. Owning is the only way I know of to keep my head above water -- otherwise, I'd be fighting the entire national economy every day, for life.
It tackles two problems in one go. First of all, many more people would be in a position to buy a home without taking on a mortgage. They would then be in a better place to save their money in order to move to a bigger place (if they so wished). Secondly, because mortgages would no longer be as great a requirement to purchase a house, mortgage lenders would be incentivised to offer people attractive mortgage rates in order to encourage people to borrow money.
In addition, microhomes need not result in large compromises. There are some great microhome designs on the market that offer attractive features whilst still coming in at a lower price than most existing UK houses. I quite like the Dwelle designs, but there are plenty of other options available.
As a side note, I have a book on economics called 'The Grip of Death'. The title of the book comes from the meaning of the word mortgage, which I found interesting... Mort = Death, Gage = Pledge ('Grip' is accurate if the pledge becomes an obligation). I personally believe long term mortgage arrangements to have a tendency to damage personal enjoyment of life, so the name seems apt.
That said, in parts of the world (cough Japan) it is expected that you demolish the old building and build your own when you buy a property (and you build cheap and light, accordingly), so perhaps this is another UK-centric concern.
Another UK consideration: we have a tendency here to build housing outwards rather than upwards. In a country with relatively little land, if we're considering alternatives, IMO it's well worth considering more high-rise buildings in place of low-density sprawl - not only do they not carry the stigma elsewhere in the world that they do in the UK, but they're even now losing it in the UK; check out the "luxury apartment" blocks going up like mushrooms in the London docklands and around rail stations in sleeper towns.
The bulk of the cost of buying a house in the UK seems to be land price. In fact, those microhomes are _more_ expensive buildings than a traditional build - from this calculator (http://www.jewson.co.uk/working-with-you/for-self-builders/p...) the price of a 100m2 build might be ~112k, compared to the microhome 70m2 'lifetime' model.
Microhomes are a nice idea, but they wouldn't help me in East of England.
Sure, this hasn't bitten anyone for the last 20 years, but it happened in the 80s.
Pretty much everything. The stagnation and zero inflation of many economies is a problem.
Separately, I'm not sure I understand your point about price vs. value. In SF or London, apartments have high value (evidenced by people willing to pay high rent to live in them). Maybe in some places (Beijing?) apartment prices are hard to justify based on rental yield. But what makes you think home prices in general are divorced from home 'values'? What would make prices go down that would not also not decrease whatever measure of 'value' you're using?
Interesting observation, does make sense. I suspect a strong relationship to the land the house is built on. The value of the house itself should go down indeed, because the house deteriorates from the moment it is built.
However, the house makes that land usable and the land underneath it might become more valuable, because more people want it in dense areas.
Accordingly, house prices fall in less desired areas.
