Why owning a home is so pricey ...

It is likely that the AI revolution will usher in some sort of universal basic income because there will be so much unemployment.
I graduated from High School in 1966. In Grade XII one of my friends said that with the coming 'automation of everything', none of us would have to work very much, we'd have lots of leisure time, and we'd all become prosperous. Let me know how that worked out.

I suspect AI will put a lot of people who currently have good jobs out of work. Some of them will go on to new jobs we can't even imagine now. And many of them will stay unemployed and end up living in their cars. And a few people who pay very little tax will become very rich.
 
That’s about even with many US metro areas. The quoted UK average house cost (sure it’s not median?) is actually lower than the $416,000 in the US.

It's average rather than median but the average is dragged down by several areas where house prices are very low in the north of England, so I would say it's lower than typical for a metro area. If house prices are now similar in the UK and the US then that's quite a change from when I remember US prices being nearer half. Partly that's exchange rate movement but in general the US economy is leaving us behind.
 
It is more than just interest rates and current home prices making homeowning a pricey challenge- taxes and insurance

It is really getting tough to own a home. The discussion often centers around the price of the home, and interest rates. Taking a back seat is often taxes and homeowners' insurance. The below chart is eye opening.

One has to wonder if homeownership in the U.S. will be on a steady decline. Maybe other forms of residences will be the new normal, like multi generations living in one residence (like most of the world), living in RVs, etc.



From Chuck Cowan:
A recent Wall Street Journal story highlighted how the percent of the average mortgage payment that is now going towards "property taxes and home insurance" is the highest it has ever been. This reality, combined with higher interest rates, has made home affordability much more difficult for far too many people. Property taxes rarely decline, and home insurance premiums don't appear headed for any meaningful decrease anytime soon. The direction of mortgage rates will have a significant impact on the affordability of homes for future buyers.
View attachment 256448
The problem my parents are finding is that in their neighborhood three to four years ago homes were in the $325-$375,000 now people on the same block are forking out 500k. Now you have to raise your insurance coverage.
 
The problem my parents are finding is that in their neighborhood three to four years ago homes were in the $325-$375,000 now people on the same block are forking out 500k. Now you have to raise your insurance coverage.
And how much equity do they have?
 
DOGE can begin by enforcing the collection of delinquent income taxes from dodgers and those that are paid in unreported cash. Also get rid of the deductions that only high earners can ever hope to enjoy. Give the IRS a large enough budget so that they can enforce our tax laws. Or maybe we should just avoid hard decisions and keep raising the National Deficit. Our choice.
Well, Doge can't enforce laws - that is the justice department and IRS.

Doge can't make laws or hire people, that again is the congress. Presumably it could be recommended, but that already happened, and there is a pretty significant split on that thought.

And when the IRS did hire people, they mostly used that staff to audit people already trying to obey the law. Because going after people that don't wish to be found is hard, and as usual the federal agency always chooses the path of least resistance to justify their existence.

Lastly, if they were able to find these people, in all likelihood they would fail to collect much. Without knowing each case, much could be discharged due to bankruptcy, death, or simple inability to pay.

I wouldn't expect much either way. Compared to other countries, the USA federal government actually does a pretty good job of collecting taxes compared to other countries.
 
To give you an idea of UK housing costs I'll show what I pay.

Our single story house is well above average in size at 2000 ft2 and in an expensive area. Value approx $1.05 million. The average house price in England is $386,000

Property tax $4350 per year. The average small house would pay half that and the biggest houses would pay a max. of $5300

Insurance $150 per year which covers building and contents. That's very much lower than average for the size of our house because of our age and because we are in a very safe area.
In Canada our 1 1/2 story house is about average size at 2350 ft2, and in an expensive area. Value approximately $1,400,000 Cdn. The average house cost in Canada is $689,000 but the median cost is probably much lower, as a guess more like $400,000 - $450.000.

Our property tax is about $4,000 Cdn per year.

Our home owner's insurance is $3872/year which covers building and contents (including earthquake risk), and liability. We live in an earthquake is possible area and the insurance for that alone, with a $75,000 deductible, is $2238/year.

Home owner's insurance has increased dramatically in the last few years because of the equally dramatic increase in wild fires, flooding, storms, landslides, etc. An article in today's paper says that insurable property losses have increased by more than 10X in the past 10 years.
 
I graduated from High School in 1966. In Grade XII one of my friends said that with the coming 'automation of everything', none of us would have to work very much, we'd have lots of leisure time, and we'd all become prosperous. Let me know how that worked out.

I suspect AI will put a lot of people who currently have good jobs out of work. Some of them will go on to new jobs we can't even imagine now. And many of them will stay unemployed and end up living in their cars. And a few people who pay very little tax will become very rich.
I think it was early to expect job losses from mechanical automation of the day but the risk of the AI revolution is truly astonishing.

I use and read about AI daily. When you have a program that can handle 2 weeks worth of underwriting (human speed) in 2 hours, you will see entire departments cannibalized. Only a few of them will be kept to run the system and then those will be replaced by a more powerful AI. I agree with the wealth generation fact, those who can yield this will be able to run leaner companies with massive productivity. You will see multi-billion dollar companies with under 50 employees in the future, maybe less than that.
 
I graduated from High School in 1966. In Grade XII one of my friends said that with the coming 'automation of everything', none of us would have to work very much, we'd have lots of leisure time, and we'd all become prosperous. Let me know how that worked out.

I suspect AI will put a lot of people who currently have good jobs out of work. Some of them will go on to new jobs we can't even imagine now. And many of them will stay unemployed and end up living in their cars. And a few people who pay very little tax will become very rich.
I graduated college and entered the industrial automation field in the late 90's. Things have automated a lot. There are virtually no people doing light assembly anymore like when I started - its mostly done robotically. The people working in factories are machine operators, maintenance, or there loading bins and sweeping the floor. Post WWII 30% of the workforce was in manufacturing, now its about 8%, but we still put out a lot of goods. The workforce transitioned to the service sector, which is like 70+% of employment.

So assuming AI does the same thing - it will no longer be the lowest rung of factory worker loosing their job - it will be some of the highest rung of white collar jobs. Those jobs pay a lot, so it will be not only difficult for those people to re-train, but also will be very deflationary. Are we going to replace actuaries, accountants, doctors making $100+K a year with a Universal basic income? Obviously its a much smaller number of people, but the top 20% drive the majority of consumer spending.

Interesting times ahead.
 
So assuming AI does the same thing - it will no longer be the lowest rung of factory worker loosing their job - it will be some of the highest rung of white collar jobs. Those jobs pay a lot, so it will be not only difficult for those people to re-train, but also will be very deflationary. Are we going to replace actuaries, accountants, doctors making $100+K a year with a Universal basic income? Obviously its a much smaller number of people, but the top 20% drive the majority of consumer spending.

Interesting times ahead.
I don't think AI can replace doctors but I think AI could be a great help in diagnosis.

Many medical conditions have similar symptoms and distinguishing between them can be subtle. Sometimes an experienced physician "just knows" the diagnosis.

Where AI will be handy is in suggesting rare conditions that physicians might not think of (or maybe even know about). In medicine there are "canaries", rare conditions a physician might see once or never in a career. You just have to know about them. An example is a lady who presented to my office with "eczema" on her breast. It sure looked just like eczema and I couldn't find a lump but I sent her to a surgeon and she has surgery for breast cancer the next day. A physician just have to know that an eczematous rash on a ladies breast often represents an underlying cancer. Knowing that quite likely saved her life.
 
A physician just have to know
Exactly. You just have to know. Except AI can know everything, and a Dr. can never. Every study, every clinical trial. All the massive clinical trial databases will be loaded and regression run and the statistics calculated beyond anything any person can know.

So sure, you will still see a doctor, but doctors will be twice as efficient because all the inputs will already have been loaded and potential diagnosis made ahead of time, so you will need only 1/2 of them.
 
Exactly. You just have to know. Except AI can know everything, and a Dr. can never. Every study, every clinical trial. All the massive clinical trial databases will be loaded and regression run and the statistics calculated beyond anything any person can know.

So sure, you will still see a doctor, but doctors will be twice as efficient because all the inputs will already have been loaded and potential diagnosis made ahead of time, so you will need only 1/2 of them.
Except AI can only know "everything" that is entered into it which will never be everything. And data entry being a human endeavor will include the already existent and ever present data entry errors.
 
Except AI can only know "everything" that is entered into it which will never be everything. And data entry being a human endeavor will include the already existent and ever present data entry errors.
No doubt, but it will get better over time. Will it be any worse than a human?

Also even if there are some data entry errors they will get washed out as anomalies in the regression. Were talking about data sets with literally millions of entries - most of which will be the results of tests that are never touched or entered by a human - so no fat finger errors.
 
That`s just heart breaking. How long before we have tin shack ghettos.
They are ending their lease on their $1,900/month 3bd, 1b home for a 5th wheel camper financed for 15 years at $400/month. Thing is it’s tiny and I don’t see how you wouldn’t go insane in such a cramped space with 3 small kids.
 
Back
Top Bottom