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Comment by baal80spam | Hacker News Reader

My DK friends say that housing prices in København are outrageous. Did the genius fix work only locally?

I don't think there is one major/capital European city that doesn't have outrageous prices right now, at least from what I've seen.

That shouldn't stop us from finding solutions to similar issues outside of the major cities like Copenhagen, even if the problem isn't as noticeable in the country-side or minor cities.

This article isn't about the price of a house, it's the price of the money you use to buy the house.

Most countries outside of the US also have a "fix" for this specific problem just by not having 30 year fixed rate mortgages. For example in Canada most fixed rate mortgages are only fixed for 5 years. So we don't have the mortgage lock in effect that the US has, but that's only one cause out of dozens for outrageous housing prices.

As I understand it, the Canada housing market is significantly more broken than the US one overall:

https://awealthofcommonsense.com/2023/09/the-u-s-housing-mar...

Also, isn't there now a massive concern about large scale loan defaults and bankruptcies the next time mortgage rates reset in Canada?

Structurally, the Canadian housing market is much less broken than the US, IMO. Toronto and Vancouver are adding housing at rates unparalleled in any US city outside of Texas.

But Canada also has population growth ~10X that of the US.

You guys have 30 year fixed rate mortgages???? How the hell can that work? How can banks predict with any accuracy the interest rates for that kind of period?

I had a 3-year fixed rate mortgage some 5 years ago, fixed at the rate of the time which was historically extremely low (below 2% pa), before the interest rates skyrocketed, and was really happy :D I had a couple of years on those rates... but then I went to re-negotiate and it was best to get just floating rates as the banks were all panicking and would only freeze rates for 3 years at outrageous levels... I think I got floating rates at around 3.5% or 4.0% (it has gone down since). I imagine it would be extremely dangerous for a bank to just have frozen my rates for 30 years anywhere near that historical low, so you would have to pay a huge margin for them to take that risk , no?

The federal government buys a significant percentage of these loans and eats the interest rate risk. It’s a direct subsidy.

At the bottom of the rate curve a few years ago a 30 year fixed rate was 2.8%, a 5/1 adjustable rate was 2.5%, and a 15 year fixed was 2.1%.

Did you know that the US has one of the best income-to-housing-price ratios in the world?

Thank fuck my mortgage rate is locked in. I refinanced when rates were at rock bottom, I'd hate to see what my mortgage payment would look like today if my bank was allowed to raise it.

That's the Canadian system, have to renew your rate every 5 years. It's great for the banks. The tighter regulations helped Canada avoid the underwater mortgage fiasco of the US in 2008/2009, but mostly it's just a really good deal for the banks. :)

It’s the same problem in every desirable major city in the world, especially if you do relative comparisons within the country. Demand won’t die unless we start seeing widespread depopulation that can’t be offset through immigration, and from the supply side, it’s in the best interest of the homeowners (majority of the voter base) to keep the prices high. Basically, our best bet is to slow down the housing inflation, rather than deflation. Since it won’t happen easily, and if it happens, there will be bigger and worse problems.

I might be wrong, but that’s what I gather while renting in one of the hot spots of extreme housing prices (Vancouver).

Because the real cause of high housing prices is too little housing supply (relative to demand).

This "genius fix" does nothing to help that.

The solution is to Build. More. Housing.

There are literally dozens of causes for high housing prices. Any one fix is not enough.

For example, the Ontario Housing Task Force had 55 recommendations, and that's only for the issues of provincial responsibility.

Here's the recommendations - https://www.ontario.ca/page/housing-affordability-task-force...

#1 is Set a goal of building 1.5 million new homes in ten years. #2 is ... set “growth in the full spectrum of housing supply” ... as the most important residential housing priorities... #3 is ... Allow “as of right” residential housing up to four units and up to four storeys on a single residential lot. ...

etc.

So a lot of these boil down to build more houses / let people build more houses.

Build more _multi family_ housing and make it cheaper by doing away ridiculous parking spot requirements and outdated fire codes.

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