How low will property go?

cells

lisyloo wrote: »

How does it help most of them if they don't get it until they are In their 50's 60s or 70s?

Women typically have children later and later. If we take the first child at 30 and the second at 35 (Looking at the people I know its probably closer to 35 and 40) that means by the time the children are 35 themselves the parent is 65-70. (70-75 if what I am seeing becomes the average)

Therefore there wont be a long wait.
Also I think (estimate) more than half of the transferred wealth from generation to generation is not by inheritance on death but by gifts well before then. For me personally I am very likely to gift away almost everything I have by the time I hit 70 beyond that is too risky. You can lose your mental capacity and make poor decision.

Are you saying that they run up big debts in the hope that it will get paid off eventually? I don't think mortgages work on that basis so your 8.8 is irrelevant to what young people can borrow.
Or are you saying a proportion will inherit early?Or what?

No matter the timing the fact is this £8.8 trillion is going to go from the old to the young. This is also a figure that is increasing. Also its such a huge sum (and growing) that there is nothing stopping people from skipping a generation. The last person I know passed on wealth their their kids (age 50-55) who then passed it on the same year to their own kid (age 29) as they already had all they needed.

This will be more common especially as the age women have children has gone from the early 20s towards the mid 30s

Obviously on individual cases no-one can rely on it. There are complications like estrangement, toy boys, new partners with second families, nursing homes, dimensia etc.

yes, individuals might get nowt some almost certainly will get nowt. On the other hand some will get far more than they ever expected.

westernpromise

cells wrote: »

there might be an override function, eg let people drive but the computer takes over when it detects the human is clearly being stupid or even intentionally trying to cause damage (like the truck killer in paris)

You'll also be able to pay extra for a version that talks to other cars and puts your safety above theirs. There is, for example, simply no way that Tony Blair is going to set foot inside a self-driving car that has the same software as Mrs. Miggins' Nissan Micra. The Blairware will ensure that if an accident is looming and it's either him or Mrs. Miggins who gets it, it won't be him.

cells

mwpt wrote: »

There is a reason German's sell a lot of cars, because people want to buy German cars, because they consider them high quality. Self driving technology is orthogonal to making a good car. There will be nothing to stop the German's who make good cars, letting someone who makes good AI, make the AI, then integrate it with their cars.

sure, I did not say its going to happen I even said in my post I have no idea how big a risk it is, its certainly not a zero risk though

If you look at the direction of Tesla they seem to want to become a fully vertically integrated EV manufacturer and look to be leaning towards an uber type self drive fleet. I am not sure it makes much sense for them to share/sell their self drive software tech to others. If they keep it for themselves they will take a huge chunk of the market.

My guess is it will evolve like the smartphone market. Apple was the first and they did not give away their software and become very profitable and took a huge chunk of the market with effectively a small handful of products. Then came android who sold/gave away its software to be able to compete with apple.

I think the car area will work in a similar way. Tesla, assuming they are first, will have the opportunity to ramp up rapidly deploying tens of millions of cars to act like a self drive taxi company. They will also sell personal high end self drive cars to become the apple of the car world

At some point another company will come up with an effective self drive technology and will compete with them. The time it takes from the first to the second company will determine how much of the market the first company can take


Also Germany is at the High end of the market. They dont need to lose a lot of customers to lose a lot of £$£$. Japan is a bigger exporter of cars than germany, by units, but a much smaller exporter by value.

cells

westernpromise wrote: »

You'll also be able to pay extra for a version that talks to other cars and puts your safety above theirs. There is, for example, simply no way that Tony Blair is going to set foot inside a self-driving car that has the same software as Mrs. Miggins' Nissan Micra. The Blairware will ensure that if an accident is looming and it's either him or Mrs. Miggins who gets it, it won't be him.

I think that the self drive tech is far far away from making such decisions, they can barely self drive now. Giving them the ability to determine in real time multiple versions of action and pick the best outcome is going to be about a thousand times harder than self drive.

Also its likely going to be much much safer for everyone. Even without self drive tech EVs should be a lot safer as the crumple zone at the front can be much longer/larger as there is no big solid engine.

cells

p1212 wrote: »

German car manufacturers will do exactly the same as they did with electric cars, they will let someone else (Tesla in this case) invest huge amounts into R&D and marketing the new product to people and when people are ready for electric cars and tech is more or less done they just make a way better electric car with a minimal investment.

Tesla is only a startup, a hype, a tool to get the money from the investors and still makes losses.

If the american tech guys crack self drive tech then car makers will just recruit some of their team for the necessary amount of money + promotion.

Also the whole self-drive thing is like google voice control, the tech is there, they want people to use it, but people don't like it, cause it is more natural to type in something with full control over the whole process, rather than give voice instructions with less effort, but without zero control over what happens on the computers side.

That is the most important thing, people want to keep control.

The same will happen with self drive cars, the whole driving process is about avoiding potholes, overtake cyclists, you see a gap and you switch lanes, going through the yellow etc... whenever YOU want. Yes, you would need to make less effort in a self-drive car, but it is going to be similarly frustrating not to have any control over the process.

To watch the car taking that bend at half the speed YOU wanted. It will be like running in water, extremely frustrating.

Also they are telling us we would do things in the self drive car like reading, washing our teeth etc..., well just try to read in a car, you will get sick in under 1 min. Also who the hell wants to wash their teeth in a car? That's why we have bathrooms and the luxury is actually not washing your teeth in your car, but having the time to do it at home.

My crystal ball guess is that the self drive world will evolve into a type of uber service but without the driver.

Many people wont want to own their own cars if there was an even better even faster even cheaper version of uber and without the driver.

If that is the way the market goes, would tesla who wants to set up a self drive version of uber be willing to sell its software to other automakers? I dont think so, at least not near the start where their software will be the key to winning market share in this new market space

The first will become the apple of the smartphone world. High end cars and a large chunk of the marketspace. The second will become the google selling/giving away its software to compete with the entrentched first

lisyloo

that means by the time the children are 35 themselves the parent is 65-70

So if they live till 85 (normal life expectancy) then the children are 45-50?

Therefore there wont be a long wait.

That's usually after having kids, after having paid the mortgage off and thinking about retirement.
Obviously some people will die earlier and vice versa some will be later.

No matter the timing

I think the timing is crucial because it doesn't help people get on the ladder when they are young and starting a family even if that is more commonly 35 these days.

I agree with you that amongst wealthier families some may come down beforehand - we're already very familiar with BOMAD so maybe we need BOGAG (grandma & grandpa).
There are plenty of families (maybe 50%) that aren't wealthy enough for this to happen.
I'd say my family is fairly average, but there's not a lot to pass down except fairly low value houses between 4-6 kids. Obviously some will be a lot better off, but I'd say were fairly normal i.e. if you live into your 80's there's probably not a lot left except a house, which outside of London might be worth say £200K, or if you've downsized to a flat then maybe £100K to split between 4.
Obviously some people live in a "different world" to me, but I think our families are fairly average in "white van man land" around Bristol.
I AM thinking outside my own world, but I think most of the country is more like mine than folks in London with multi-million pounds houses.

cells

lisyloo wrote: »

So if they live till 85 (normal life expectancy) then the children are 45-50?

That's usually after having kids, after having paid the mortgage off and thinking about retirement.
Obviously some people will die earlier and vice versa some will be later.

I think the timing is crucial because it doesn't help people get on the ladder when they are young and starting a family even if that is more commonly 35 these days.

Those who inherit and have an excess of assets have to rent those assets out. (directly or indirectly. if you receive money and you dont spend it you are effectively renting it out. If you receive a house you can rent it out, or sell it, and rent out the money)

With 6 children per woman, people have no excess they have to build/save

With 1.5 children per women, people inherit and dont need to save. Whats more they inherit more than they can use (as its below 2 children) so they need to rent out their assets. This causes rates to be zero or even negative.

Whats more its widespread even poor people benefit from these lower rents on assets (be it lower rents on homes, or lower rent prices on money (eg interest rates))

Longer term. With 1.5 children per women asset prices will go down potentially towards close to worthless (assets that rent at zero have close to a zero worth)

That is to say with 1.5 children, that means a longer term falling population. With a falling population yet increasing stock of capital, eg homes, what happens? Well you get Germany a country that entered the low childbirth rate sooner than much of the rest of the west. The result of this 1.3 children per women is very low house prices and very low rents.

So even if you are from a poor family, living in the 1.3 chidren per woman society rather than the 3-4-5-6 children per woman society means you can (and do) save less

I agree with you that amongst wealthier families some may come down beforehand - we're already very familiar with BOMAD so maybe we need BOGAG (grandma & grandpa).
There are plenty of families (maybe 50%) that aren't wealthy enough for this to happen.
I'd say my family is fairly average, but there's not a lot to pass down except fairly low value houses between 4-6 kids. Obviously some will be a lot better off, but I'd say were fairly normal i.e. if you live into your 80's there's probably not a lot left except a house, which outside of London might be worth say £200K, or if you've downsized to a flat then maybe £100K to split between 4.
Obviously some people live in a "different world" to me, but I think our families are fairly average in "white van man land" around Bristol.
I AM thinking outside my own world, but I think most of the country is more like mine than folks in London with multi-million pounds houses.

We know there is a stock of wealth of about £8.8 trillion in the UK. We know old people die. We know this £8.8 trillion is increasing. So clearly the younger generation is going to get £8.8 trillion (likely more) than the older generation. They either benefit from this free capital (eg move into the inherited home, or buy a home from the inherited money) or if they already have their own capital they can pass it down a generation or rent it out in the market. This renting of the capital out, to the lower generations, helps the lower generations


Also inheritences are fairly widespread. I did some posts about it

p1212

cells wrote: »

Women typically have children later and later. If we take the first child at 30 and the second at 35 (Looking at the people I know its probably closer to 35 and 40) that means by the time the children are 35 themselves the parent is 65-70. (70-75 if what I am seeing becomes the average)

The problem with ever increasing house prices and financial stress is this - as you perfectly said -, people will start families later and later and than less and less of our own children will be born.

Economy needs young ones, but we don't have them, as natural reproduction is falling since 1970-1980 exactly for the reasons you mentioned - increasing financial stress on the young ones, so they start families later and later.

One solution to the problem would be to relieve financial stress on our own young people, let them have their own property and security at the age of 20 so they can start having children early. The problem with this is that then property would need to be five-ten times cheaper, a lot of speculative money would disappear, investors would lose a lot of money and the banking system would go upside down, the GDP would go freefall. And on top of it, the results - the adult, who spends his money - would only come 18 years later...

The second solution to the problem is just to open the borders and replace our children with immigrants. They spend in exactly the same way as our children would do and you don't have to wait 18 years while they grow up. Then you don't have to tighten speculative money, banking system so GDP stays high.

It is basically a no brainer for politics, that's why all western countries have some kind of legalized immigration, US has the green card lottery, Europe has open borders. It is not about humanity, it is pure business.

As I said in my former post, people would actually go for solution 1 and want to have a cheap property at a young age, so they can start a family, but speculative money wants exactly the opposite, the more expensive the property, the later the young ones can buy it, the more they will pay to them in the meantime in the form of rents and capital gains. The best would be if they could lock out entirely everyone else from property ownership and they could keep everyone renting forever. Investing in people's basic needs is the biggest business, you will always have demand, they can't avoid you.

People would push down property prices, speculative money would push up property prices, these two forces fight against each other.

The "regulator" should be the government, but as it is debt and speculative money which holds up GDP, government supports solution 2.

That's why we will never shut down the borders - we could do it anytime we wanted as most immigrants are coming from outside of the EU. That's also why EU eats up eastern europe at a very high pace, cause EU wants their immigrants, nothing else.

What will happen from now on?

I don't know, but I think this will change, investing in people's basic need - like property - will be banned quite soon (I mean soon in historical terms, so a few decades) and then speculative money will lose out big time.

cells

p1212 wrote: »

The problem with ever increasing house prices and financial stress is this - as you perfectly said -, people will start families later and later and than less and less of our own children will be born.

I used to think the two were linked but there is no evidence for this. For example the total fertility rate in Scotland is worse than England even though house prices in Scotland are cheaper

Economy needs young ones, but we don't have them, as natural reproduction is falling since 1970-1980 exactly for the reasons you mentioned - increasing financial stress on the young ones, so they start families later and later.

Again this is simply not true, both on a global and local scale, poorer countries and poorer people have more children

One solution to the problem would be to relieve financial stress on our own young people, let them have their own property and security at the age of 20 so they can start having children early.

That simply does not make sense, if all 20 year olds had a house then we would need a very great number of single occupancy homes.

The problem with this is that then property would need to be five-ten times cheaper, a lot of speculative money would disappear, investors would lose a lot of money and the banking system would go upside down, the GDP would go freefall. And on top of it, the results - the adult, who spends his money - would only come 18 years later...

your idea of cheap homes already exists in stoke-on-trent. are the yoof of stoke really much better off and having kids in their early 20s?

The second solution to the problem is just to open the borders and replace our children with immigrants. They spend in exactly the same way as our children would do and you don't have to wait 18 years while they grow up. Then you don't have to tighten speculative money, banking system so GDP stays high.

Long term we have to go back over 2 children per women or the species will die out. Problem is, worldwide the fertility rate is falling and is now about 2.35 worldwide. The replacement rate is actually 2.3 worldwide (as a lot of girls die before having children of their own) so we area globally already entering the stage of falling demographics. the population is still growing as globally life expectancy is increasing but that is temporary.

I don't know, but I think this will change, investing in people's basic need - like property - will be banned quite soon (I mean soon in historical terms, so a few decades) and then speculative money will lose out big time.

there is no need with total fertility in the region of 1.5 children per woman in developed countries we will end up in a situation of too much of an excess. look at germany

http://www.spiegel.de/international/germany/demographic-shift-in-germany-leaves-thousands-of-empty-homes-a-866298.html

sann420

westernpromise wrote: »

No it's not. It's a potty, adolescent, conspiracist pile of steaming wibble.

Maybe you have some long standing disagreements with p1212 but the post that I quoted was really on the money. I have hardly seen a better explanation of London "Housing Crisis".

London has had a population of 6-8 million people for better part of half a century. This city has the capacity and the history to handle such a large population. Its not like a plastic chinese city that was propped up within past decade. I dont see how dynamics have changed so much in the past 5 years or so that young professionals are struggling to buy a 1 bedder in a shoddy area. The prices to wages ratio is beyond belief.

Its all propped up by the govt to get out of the 2008 recession. Basically the fiscal numbers look good on paper which in turn helps the credit based economy tick. But there is nothing solid underneath these numbers.

BTW I am saying this as a person who is sitting on a very decent profit through property by buying in 2013 but I dont see how this house price madness can or should continue.