The politics of housing

[pietillidie]

[stui magpie]

^

Some oversized monstrosity that takes up the whole block, usually 2 story, that looks completely out of place in the neighbourhood, except when you get a whole suburb of them like some of the newer estates.

The actual definition is " McMansion is a disparaging term for overly large and opulent mass-produced homes without architectural authenticity or class."

[think positive]

[Skids]

This discussion made me think about when I first got into the housing market.

First house (duplex) was purchased in 1987 with my ex-wife, she still lives there.

Osborne Park - 10k North of the city, 1km to the freeway and about 8k to the beach. It cost $57,500. I was just out of my apprenticeship, clearing (without overtime) around $400/wk on wages. I can't recall the mortgage payment, but if I didn't do overtime or a cashy, we'd have no money between paydays.
Anyway, I lost the lot when we split.

Me 'n Kel bought in Greenwood - 13k North of the city 7k from the coast, for $135k in 1994. The mortgage repayments were $400/wk. My wage, without OT was just under $500/wk and Kelly was bringing home around $300/wk. Again, without me doing cashies or OT we would have only enough for essentials.
I've posted this before, but, the furniture we had was all hand me down stuff or things I'd picked up from verge throw outs in the yuppy areas that I refurbished.

So today, the house next door sells for $865k, repayments on an $800k mortgage are $1200/wk, 3 times what we were paying.
Our combined income now is more than 3 times what we were earning when we started.

So, in summary... nothing has really changed, other than interest rates are lower now.

[pietillidie]

^Sorry, Skids, but from a *national* POV that's meaningless. The ratio might not have changed for you, but that's not even close to the national average ratio shift. And no, the folks from the three biggest cities in the country can't all move to Dimboola. Only a very small percentage of people can work favourable angles (high incomes and low house prices in low-demand locations) without the economy collapsing. That's why economists don't care about some bloke on Facebook who's beaten the odds by living on a houseboat on a lake in Tasmania.

There were a few good years from 2014-2019 when interest rates dropped, but they dropped for a reason, i.e., to help economies recover from scarring from the GFC and deflation associated therewith. A brief window in a rubbish economy when everyone was still recovering from the worst financial crisis since whenever was barely a ripple in the pond. Better than nothing, but interest rates don't go to near-zero to stave off deflation for fun; rather, to keep economies on life support while GFC debt overhang was dealt with.

Here's the actual overall Australian equation (Aus Fin Review Sep 2023). It's also crystal clear that higher past interest rates don't come close to bridging that gap, with the proportion of income spent on housing far lower even when interest rates were 17% in 1990 (see: https://www.datawrapper.de/_/1TwJx/). Furthermore, spending needs make the situation far worse when the decline in support for lower-income earners (including government housing), increase in job acquisition costs and years lost to job preparation (i.e., education and training, mandatory for many more jobs, hence the student debt and later career and earning starts), and distance from employment centres for even potentially affordable homes is taken into account.

[stui magpie]

So the auction was this morning for the joint just down the road. $1.207M

Big crowd, mostly white but a few Chinese and Indians. Bidding started at $880k and went up steady in $10k increments. Most of the bidders were blokes 30-40, likely looking for the family home. Got up to $1.80M then some bloke who was channelling Dany from the Block started chucking in odd numbers and just steam rolled the last 2 bidders. Hard to get a read on him, short, tubby middleaged bloke in an Hawaiian shirt who looked like he'd struggle to afford a Big Mac meal.

Caught up with the previous owners for a chat prior to the auction, haven't seen them for about 20 years. They moved away and have had the place rented out until now, they're retiring and want the cash.

[think positive]

Um, sold for 1.207. Got up to 1.8? Huh

[stui magpie]

^

Read it again, steady bidding got up to $1.8M then a wildcard drove through and took it to $1.207M.

The sellers bought it for $78K in 1987.

[Pies4shaw]

1.08?

[stui magpie]

^

Yes, slipped a 0. $1.08M.

Still a lot of money for what it was, largely original 60's floor plan, 1 bathroom, tiny rooms and a quick slap of paint and rented furniture to display it.

[think positive]

gees, thats P4S, i read it 5 times then saw your post!! they are buying the land Stu, id lay odds they will knock the house down.

the tiny 514sqm block in indented head cost us $165k in 2017, there is a couple of blocks across the road for sale, 1 larger, the rest smaller, starting from $500k. and then you have to build a house! in total ours owes us about $380k. and this is a not particularly well know tiny bayside town! I reckon the vacant block in our street which is 640sqm would be at least $800k, because there is no land left around here. we bought this is I think 2007ish for 93K.

[stui magpie]

Dunno what will happen. The place next door got bulldozed and a Mc Mansion built there, next door to that a younger couple bought it and are renovating, opposite me a woman bought it and moved in with her two early 20's sons.

The location is good, dead end street, 5 minute walk to shops, cafes and a train station.

Guess we'll see what happens.

[Skids]

I get that PTID and if I hadn't worked OT, repaired old furniture and done cashies, we wouldn't have been able to afford our mortgage in the 90's.
I work half as much as what I did back then.

It depends how hard someone WANTS to work. We have a young bloke here. He works in the store and his salary is around $120k. On his time off, he drives an Uber and earns another $100k a year doing that. He is paying off the house he lives in plus an investment property.

If someone sits on their hands and thinks the world owes them a living, of course, they'll get nowhere.

You get out what you put in.

[stui magpie]

^

There's a bit in that. I was renting my house for $100 a week in the late 80's. I got first offer when the owner decided to sell and even though it only cost $100k, that doubled my payments to $200 a week.

I relied on that I had a good job and my earning capacity was only going to increase as I got older, so suck it up and go without nice things for a few years.

What people pay to rent a house in the Melbourne suburbs these days, the same repayments could just about pay off a $400k mortgage.

The myth is that our generation had it easy because housing prices were low. We still had to work and save and go without to get there though. Life is about choices, you can't have everything.

[eddiesmith]

A $400k mortgage wouldn’t even buy you a house in regional Victoria these days though!