The new houses in my neighborhood were all built 2017. There are 120 units in 2 styles: houses and semi detached houses. They all look identical and they were all built with a lot of economies of scale.
The price 2015 was: 500.000 Euro for the semi detached units.
The price 2022 is: 1.3 million.
The neighborhood did not change, the infrastructure did not improve. Nobody can explain you a logical reason (except of EcOnOmiNCs) why the house price exploded. Fine, some construction risk was prices in, let's be it 10%, also risk of default and other factors 10%. That explains 650k.
My boomer parents came, watched and complained: terrible houses, all look same, no garden, no basement, tiny garage, too close to the neighbors. They bought their house back than for 230k!
And there was this amazing time in Germany where prices for houses did not increase. They stagnated and even slightly dropped - which is intuitive as the house is getting older and less attractive!
The American crisis 2008 destroyed everything and it's incredible that until today we are not pointing towards those who's fault it was.
tldr: houses can be build with economies of scale, prices are up because of American politics 2008+
"until today we are not pointing towards those who's fault it was."
Is the rest of the world, including the EU, so helpless and agency-less that it can't recover after a 15 year old event that originated on a different continent?
Unfortunately at least in the EU we seem to be (I am your neighbour from CZ). One of the reasons why so much money flows into houses is that they promise better returns than normal stock (shares of corporations). And that is because our corporations have become sclerotic.
Another reason is the artificially low interest of the Eurozone, designed so that Italy and others do not go bankrupt when servicing their own debt. This fuels a mortgage bubble, but it has zilch to do with America.
The Czech central bank raised interest rates (we do not use EUR yet) and the prices of houses stopped climbing very abruptly. They stabilized on a high level, but they don't grow anymore. Given that there are no buyers anymore, the prices will have to go down.
>Another reason is the artificially low interest of the Eurozone, designed so that Italy and others do not go bankrupt when servicing their own debt
That is a very odd way of saying German banks don't want a debt cut. It is very easy to blame Italy and others when Germany runs a structural export surplus by cutting imports which means money is flowing into Germany only to be reinvested abroad where it flows back to Germany through structural trade imbalances. The fact that this is unsustainable shouldn't be surprising, but we want to keep the farce up and point fingers at every other country.
>The Czech central bank raised interest rates (we do not use EUR yet) and the prices of houses stopped climbing very abruptly.
You mean the price of land went down, the price of the house went up because it has gotten harder to finance it.
Europe’s problems may have been sparked by the general tightening of 2008, but how poorly the Greek crisis was handled was an own goal. The IMF already recognized how counterproductive insisting on austerity was, it was mostly at EU and German insistence that they doggedly went on with it.
Also, the EU still does not have a cross border deposit scheme or Eurobonds, so it’s a matter of not if but when the next country gets underwater.
> Is the rest of the world, including the EU, so helpless and agency-less that it can't recover after a 15 year old event that originated on a different continent?
The evidence seems to point to yes. The bottom line is that in many construction rates and employment have simply never recovered in many countries.
As to why the politicians do nothing, I can think of only two reasons. Neo-liberalism has so broken the back of socialism that governments do not have the will. Or legislatures are now so stocked with bourgeoisie property owners that they don't see the problem or in fact they like that they benefit from it.
In the U.S. we have now a panick over crime. The media and the politicians love to point at drug addled homeless people with implications of their criminality. And even the Democratic party has begun to bang the drum for the police "to do something" yet they say nothing about housing.
NIMBYism is a huge factor. Where I live, most new projects are attacked legally by individuals or small groups who wish to conserve the neighborhood in precisely the same state that it is today. Sometimes, even individual houses. It is expensive to fight those challenges off and they are often successful to the degree that the investor just abandons the project.
Our societies have grown older, and with it, they have a lot less tolerance for change. The "get off my lawn" mentality is becoming stronger with every extra year added to the national average age.
Yes, I find it very frustrating that only a handful of state governments have gone after restrictive zoning. And I find it unconscionable that the federal government fails to raise it even as a topic of discussion. Three presidents have had the opportunity to raise the housing crisis to national attention. Instead they bemoan the ugliness of people living in public.
> Nobody can explain you a logical reason (except of EcOnOmiNCs) why the house price exploded.
Interest rates falling. As rates go down the price of property goes up. If Europe were to aggressively raise interest rates to 10% then those 1.2 million euro homes would cost about 300k. But the monthly payment would be the same.
Homes cost what people that want to live in an area are willing to pay per month to live there. That means interest, principal, and taxes.
The new houses in my neighborhood were all built 2017. There are 120 units in 2 styles: houses and semi detached houses. They all look identical and they were all built with a lot of economies of scale.
The price 2015 was: 500.000 Euro for the semi detached units.
The price 2022 is: 1.3 million.
The neighborhood did not change, the infrastructure did not improve. Nobody can explain you a logical reason (except of EcOnOmiNCs) why the house price exploded. Fine, some construction risk was prices in, let's be it 10%, also risk of default and other factors 10%. That explains 650k.
My boomer parents came, watched and complained: terrible houses, all look same, no garden, no basement, tiny garage, too close to the neighbors. They bought their house back than for 230k!
And there was this amazing time in Germany where prices for houses did not increase. They stagnated and even slightly dropped - which is intuitive as the house is getting older and less attractive!
The American crisis 2008 destroyed everything and it's incredible that until today we are not pointing towards those who's fault it was.
tldr: houses can be build with economies of scale, prices are up because of American politics 2008+