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?

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