Friday, December 13, 2013

Four Thoughts re First Homes

The interlocked factors (I ranted aboot this yesterday here) are just too hard to tackle, even individually.
One alternative (which may happen anyway) is letting the whole schemozzle run into the inevitable immovable object. Tempting as that is to those with apocalyptic/Malthusian tendencies, it would cause a lotta grief to a lotta bystanders. Collaterla damage.
I see (feeling more optimistic today, y'see) four aspects which can, together, make a bit of a breakthrough.

1 - wipe the zoning nonsense. MUL's etc cause price differentials, which firstly crystallize as CG to the lucky owners, then propagate to all and sundry (who, after all, would sell their hoose for an agricultural land price when your despised but now cashed-up neighbour has just made a cool $300K cf his original purchase price?). Luvverly free CG all around - after all - we didn't buy the house to Sell it! - but of course paid for by you-know-who. Guibmint by fiat could accomplish this by lunchtime tomorrow if it put its mind to it. What Constitution?

2 - Factory builds. Proper QC, can be erected in hours not months on site, will standardise foundations etc (one of the beefs in Chch is the continuing dither over TC3 founds, which need individual geotech to establish), and being built to tight tolerances and under cover, are a generally superior product to yer average chippie-hammered together set of frames (one of which, just down my street, has been sitting out in the weather for six weeks now with no roof and no wrap - nice.)

3 - GST exemption to factory builds from accredited suppliers. This avoids the obvious problem with a blanket 'GST exemption for new builds' which will be an easy route to no-GST decks, pergolas, baches, new rooms and re-roofs - because as GST has to be taken on raw materials, who can police what they are used for? No such issue with factory builds, which will have a BOM, a nationally valid type certificate of compliance, and a serial number.

4 - The cultural attitudes and legal provisions which make such builds acceptable to buyers (who, let's face it, have wildly inflated expectations of first homes, fed by TV house pron, and egged on by the usual bevy of marketeers), and to developers who are rather fond of placing CCR's (covenants, constraints and restrictions) on their conditions of sale. If we are serious aboot FHB's, then fer crying in the sink, let them set up next to You.

Thursday, December 12, 2013

Hoose prices.

There is a Gordian knot here: a myriad of interlocking and mutually reinforcing factors. No use tackling any one alone.
  • Zoning which by prescribing allowable uses, immediately causes price differentials either side of a squiggle on a map.
  • TLA's benefit (with a time lag) in their revenue streams, as those squiggle-caused prices work their way into valuations. So are disclined to look any closer, let alone kill the Golden Goose which lays Rising Valuations.
  • Any price rise anywhere (an outlier sale, a zoning change etc) immediately propogates to the locality: suburb, area, city, province in a diminishing ring of value effect as the circle gets wider.
  • Any householder with suitably structured credit lines can cash up some increment of these value gains. Many do (ATM-bolted-to-house effect).
  • Banks encourage this: more collateral = more credit availability = greater interest revenue streams.
  • Land agents encourage the general rise in values: being commission-based, generally 2-5%, This promptly reinforces any general rise by cementing in recent-sales actual figures, on which everyone else in the loop relies.
  • Builders benefit from higher prices for existing homes, as it allows them to build to the high end of the market. There's no profit in a 90-squares kit erection, compared to a 300 squares architect-designed mansion.
  • Architects, now we mention them, are another Mr/Ms x% deal: the higher the general price level, the better their incomes get.
  • Building suppliers, that cosy duopoly, benefit from the revamps, the new builds, and the ATM-on-house syndrome. New bathroom? Just draw down that revolving credit line and spend 'er at the nearest duopolist.
  • ComCom is asleep at the switch, so there ain't no cavalry to ride in and Save anyone.
  • Building regulation ( codes tightening, LBP's needed for practically everything, Elfin Safety up the wazoo on sites- it's a Very long list) all has Good Intentions, but a few grand here, a few grand there, pretty soon, it adds up to Real Munny. From the end customer's pocket, of course. That's what that there Credit Line is for.
  • TLA's again, just to complete the loop (they, arguably, have set this whole mad shambles a-trundlin' down the track) clip the ticket to the tune of $75K per house/land package (Mike Greer, Press coupla years ago, Google it yer lazy sods). DC's fees, levies, consents, inspections. Nice racket.
  • And all this is, of course wonderfully rounded off by the rise on average incomes which supports it all. Or not, as the case may be.
But when yez stands back and looks at the whole sorry picture, and asks oneself - Where ter Start? - well, it has to be said, there's no one action, no one sequence, and certainly no painless way to do much about any of it. And zero political will - there's too many voters would get badly burned - many of them the working class. After all, who puts up the scaff, staffs the duopolies, swings them hammers, transports stuff, induces hapless bank customers to extend their indebtedness, mines the steel, etc? S'not the 1%.

We'll just haveta let this runaway train hit the buffers at the end of the track.,

Because all tracks (Thomas excepted, perhaps) have Ends.

Ah, but When?

Sunday, December 08, 2013


The Pope has ruffled a few feathers....

Many of the more history-aware readers of the early capitalists (Smith, Ricardo etc) have pointed to the societal value systems that originally surrounded the practice of capitalism itself.  As they were to an amazing extent Scots (a useful text here is Herman:  How the Scots invented the Modern World ) this world-view incorporated Calvinism and the rather severe religious affiliations that arose out of this.

Those Christian ethics informed business for a good chunk of the first century of the Industrial Revolution, a point made by such recent commentators as P J O'Rourke.  Smith's earlier work, for example, was 'The Theory of Moral Sentiments'.  Along with the 'Wealth of Nations' and a never-published third tome, Smith had intended the three to be read as a triptych of sermons.  Yes, sermons.  That's why the damned books are so wordy.

That intimate association between a stern but ultimately sympathetic value system, and the practice of industry and trade, was somewhat broken by the late 19th century (vide Engels and Marx), and finished off comprehensively by the mid-20th, as competing religions which were essentially (as David P Goldman argues) tribal/nationalistic, brought different value systems to great swathes of the globe.

We are still reeling from the turbulence this competition generated, and the virtual disappearance of organised religion and its value systems, from any association with trade and commerce, has led to two observable aspects of the zeitgeist:

1 - A Chestertonian plethora of quasi-religions (from AGW to enviromentalism in general, not to say Marixism, Leninism, Pan-Africanism, Third caliphate Pan-Muslimism) which all demand faith, have ways of dealing to apostates, and none of which have anything like the spread or ritual attractiveness of the old ones.
2 - a value-free trade and commerce, which tends to an explicit disavowal of any larger pretensions:  societal good included.

The first thing is, given that we have dug ourselves this hole, gotten into it, and burnt the ladder, how do we get out?  And the second thing is, do we have to hit some sort of wall (sorry about the mixed metaphor, we are down a hole, must have walls down there too) to wake us up enough to build a new ladder, and climb out?

And just being nice to Gaia, alone,  won't cut it.  That's another faith-based initiative.  But just like the new Pope may have been trying to warn us, we may have to be much, much nicer to each other first.

Or, possibly, much, much nastier.  Because a whole lotta people will want to jump on that ladder to a Better Life, however defined.  And the laws of Ladder Physics still apply.