A grumble about real estate

A friend is looking for a rental house in Invercargill. Their landlord gave them notice - he is moving back to Invercargill and wants the house for himself - so the friends are having to find another place to go to.

It is not easy. The real estate market is running high - there are not many houses to rent nor to buy at the moment, and the ones that are on the market are not cheap. They are probably going to need to choose between living in a house that's 1) cold, 2) expensive or 3) far. With two children in the family, none of these options are awesome.

I have said this before, but I dislike real estate agents. Although on my mailbox there is a label 'No advertising', the real estate agents keep putting their leaflets in it. Thinking of selling? Call me! Potential buyers are ready to buy!

I get very suspicious at the times when real estate agents run around happily, proclaiming the strength of the market, because usually it's an indication of something very f*cked up going on in the economy. There is either an abundance of unsustainable finance, or there is an intensive redistribution of wealth.

Neither is good.

Another friend has just bought a house 'for investment purposes'. I haven't been in it, but it is a 1960's building, so it is probably of very limited thermal efficiency or comfort - or to put it bluntly, probably cold in winter. (People who have lived in New Zealand, especially in rentals, will know what I'm referring to.) I know the price it sold for - it is very unlikely that a house that's warm will sell for that price, so at this point I simply assume that it's old and cold.

Their mortgage payment is $170 a week. The price they get from tenants is $300. It is on the outskirts of the city.

Yet another friend has just sold a house. They are moving back to North island. Two points: 1) in just two years that they've owned the house the price has gone up over $100,000 and 2) buyers offered them above asking price. Ie, two years ago they bought it for $260k, they wanted to sell it for $340k, and they actually got $370k for it.

(If someone works, say, as a primary school teacher their income starts at $47,000 a year. So $100,000 is equivalent of more than two years of full time work of a teacher.)

This is not 'normal'. I mean, it is normal in New Zealand in a sense this is what the real estate is doing here, basically, and Invercargill is simply the last to get on the bandwagon - but it is not 'normal' in a sense of the health of either the society nor the individuals. It is f*cked up. The money moves from people who don't have a lot, to people who are already wealthy, increasing the inequality.

The friend who is looking for a new rental spoke to several real estate agents, and they said that the bulk of the buyers who are amassing houses in Invercargill at the moment are people from Auckland and Wellington who are doing it for 'investment purposes' alone. 'Investment purposes', by the way, in most cases means that no substantial improvements will be done to the houses, so the houses will simply have new out-of-town owners, increased rent (which includes rental agents' fees which tenants, in the end, are paying for because the owners are not in town to deal with the houses themselves) and... that's it, basically.

When real estate agents sell old houses, they are not selling a product that has been produced to improve lives or efficiency of people who buy them. The estate agents simply move something that already exists, to new owners at a higher price than the previous owners were bought-in for. The sole purpose of the transaction is - if at all possible - to involve the new owner at a higher rate than the previous owners were, and hopefully continue moving the houses and increasing the buy-in rate (and on and on) at an ever-increasing rate.

And it is never as evident as at a time of a real estate boom, which in Invercargill is... now.

When we bought our house 1.5 years ago, I think we 'got in' JUST before it started. The listings were dropping and the buyers were increasing just as we were trying to hunt down our house, and the fact that we got hold of it was... luck. I mean, it was also persistence and several years of saving, but it was also luck. I am immensely grateful to be able to own a house and STAY IN ONE PLACE. My kids can built friendships and retain them.

The Kid is 7 years old. It is the 7th house he has lived in. I expect him to STAY HERE for a while. (Luckily, he has stopped asking me when we're going to move again.)

The friends who are looking for a new rental are saying that their children are now struggling to build friendships. The family have lived in Israel, in US, in New Zealand. The kids are old enough now that when they've moved (most recently a year ago from Christchurch) the kids have landed in new schools amongst people who've already built friendships with other people, and so after a year in Invercargill, they still feel there is no-one they can invite to a birthday party.

It's not all bad, of course. The whole family is tri-lingual (four, if you include limited Hebrew) and with a wide cultural experience from having lived in such a variety of places and climates before, but there has also been a tradeoff, and friendships for kids is one of them.

And it's not real estate agents' fault. The agents are simply people who are taking up the opportunity offered by the society to them, and are willing to do it (I would not), but I find it f*cked up that a primary school teacher drives a 1993 Honda and a real estate agent talks to my husband in a queue in a cafe and promptly offers to pay for the coffees and pies for the three men there, saying to them that if they ever sell a house, they need to call this agent first.

Like... Bleh.

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