09-02-2018, 07:39 PM
(09-02-2018, 09:53 AM)pbrower2a Wrote:(09-02-2018, 05:31 AM)Teejay Wrote: I am in full agreement with Neil Howe and I can provide an antipodean perspective (Australia and New Zealand). We here avoided the first Global Financial Crisis which hit North America and Europe very hard. The downside of that is that the housing bubble which was already pretty big when the GFC hit, inflated even more since then.
Overall Australia and New Zealand are about as bad as California was before the last Global Financial Crisis, when it comes to the housing bubble. Australia I believe because of reasons I have stated on another thread is going to face an economic depression on the scale of Greece's once the housing bubble collapses. This economic depression will be considered by future historians to be worse than the Great Depression was. The prospect of this happening is soon is about as scary as dying for me.
We have been building the wrong sorts of housing in America -- horrid McMansions and prefabricated slums -- since the real-estate meltdown. We should have been building plain, honest tract houses analogous (if updated) to those that returning GI heroes found fully adequate.
With their architectural pomposity and shabby construction, the McMansions will likely not have the durability of the honest bungalows that came into existence in the late 40s. Apartments? If you think Detroit is bad, it was an analogue to Silicon Valley as the home of the highest technology (automobiles) at the time, and it attracted people from all over the world to work in the auto plants. Detroit had almost two million people at its peak and very high rents. Does that sound familiar? Just think of what San Jose can be like when it is no longer such a mecca for talented people who spend half their income on property rent. Oh, but it is California... have you ever heard of Richmond, California? It is a real dump. A paradise climate will not be enough.
Property values increase because more people are competing to live in such housing exists. But speculation gets ahead of the cost curve, and people keep saying such things as "The Good Lord isn't making more real estate". Contrary to the myth that real-estate promoters push and that politicians enforce, anything can be priced too high, and when the prices are too high the collapse is certain.
Australia has had that problem with poorly built houses and apartment blocks which are going to fall apart in the near future. Ironically housing built back in the 1950's is of better quality and will last longer than stuff that has built in the last decade.
Australia also has had high population growth in the last decade by going from having of population of 21 to 25 million. Australia's housing crisis has not been caused solely by a lack of supply. However the demand (fueled by high immigration rates), along with tax breaks favorable for housing (where rental losses can be offset against future income) has fueled a housing bubble comparable to places such as Vancouver and California.
When the housing bubble bursts, Australia is going to enter an economic depression comparable to what Greece has experienced. National GDP will fall by up to 26% and unemployment rise to around 30%, although the Australian dollar will fall to an extremely low level. Although it is not going to be as protracted as Greece's (which is in the Eurozone).
Socially this will mean an exodus of professionals and people with dual citizenship in other countries from Australia, resulting population growth screeching to a halt and shrinking for a little while. Also I am predicting very visible tent cities popping up across the country.
Politically our party system with the Australian Labor Party and the Liberal-National Party coalition is likely going to collapse like it did in Greece, Italy and Spain. I can't predict how the new party system will turn, although the radical left will come into prominence when the bank bailouts and austerity to pay for it comes.