Homeowners on variable interest rates in Australia face their gazillionth rate increase in the last year today. It must be excruciating, especially with more predicted in the not to distant future to rein in rampaging inflation. We are fixed for five years, which is good. My sister in law is selling their family home, which they worked very hard to get into because their period of fixed interest ends shortly. The revised repayments are unaffordable. This for somebody who lends for a bank. She knows what she is talking about.
This at a time when housing affordability is at its lowest for a generation and their is a huge under supply of affordable housing. Many of the factors driving this are external, with huge pent up demand for many Australian resources contributing to inflation.
At least it is not as bad as in the US.
McMansions as McSlums? as predicted for many years by James Howard Kunstler in Clusterfuck Nation.
At Windy Ridge, a recently built starter-home development seven miles northwest of Charlotte, North Carolina, 81 of the community’s 132 small, vinyl-sided houses were in foreclosure as of late last year. Vandals have kicked in doors and stripped the copper wire from vacant houses; drug users and homeless people have furtively moved in. In December, after a stray bullet blasted through her son’s bedroom and into her own, Laurie Talbot, who’d moved to Windy Ridge from New York in 2005, told The Charlotte Observer, “I thought I’d bought a home in Pleasantville. I never imagined in my wildest dreams that stuff like this would happen.”In the Franklin Reserve neighborhood of Elk Grove, California, south of Sacramento, the houses are nicer than those at Windy Ridge—many once sold for well over $500,000—but the phenomenon is the same. At the height of the boom, 10,000 new homes were built there in just four years. Now many are empty; renters of dubious character occupy others. Graffiti, broken windows, and other markers of decay have multiplied.
The article addresses some of the underlying factors.
If gasoline and heating costs continue to rise, conventional suburban living may not be much of a bargain in the future. And as more Americans, particularly affluent Americans, move into urban communities, families may find that some of the suburbs’ other big advantages—better schools and safer communities—have eroded. Schooling and safety are likely to improve in urban areas, as those areas continue to gentrify; they may worsen in many suburbs if the tax base—often highly dependent on house values and new development—deteriorates. Many of the fringe counties in the Washington, D.C., metropolitan area, for instance, are projecting big budget deficits in 2008. Only Washington itself is expecting a large surplus. Fifteen years ago, this budget situation was reversed.
This is ironic, because I lived in Washington DC when this was indeed exactly the opposite. People were fleeing the city with its corrupt and semi bankrupt municipal government, dangerous neighbourhoods and urban decline. Huge commuter communities were sprouting up anywhere with land and within a 1-2 hour commute of Washington. Not too bad when interest rates were low and petrol was around a dollar a gallon. Changed days now.
Another thing the article hints at and which is a growing trend here in Australia is the increasing numbers of people living alone in fairly large houses. There is a huge imbalance in the efficient use of the current housing stock.
Tricky issue, with no easy answers.