Hot property

An unwelcome feature of Australian life comes to (parts of) the US.

Almost everything I’ve missed most about Australia during the past two decades have been simple pleasures, from family and friends to consistently amazing coffee, Turkish toast with Vegemite, summers filled with cricket and tennis and skiving off work, and the country’s particularly and peculiarly irreverent sense of humor.

But there’s something more complex I missed: the insane property market.

During my first stint in Sydney back in the mid-1990s, I rented a unit in a converted wool store for a price I now can’t remember. But the dream was a terrace home in Paddington: one like this, which sold for $A285,000 in 1993 and is within walking distance of bills, the late Bill Granger’s first restaurant which happened to open the same year and went on to change the face of Aussie cafe culture.¹

Thirty-odd years ago, $A285,000 seemed an impossible sum relative to my salary of something like $A50,000 a year. Cobbling together a deposit was one hurdle; mortgage rates hovering around 10% another. But the Australian property market has become my ‘holy shit!’ of what ifs. That same terrace house sold for $A735,000 in 2000 and $A3.15 million just two weeks ago. The issue of housing affordability has for years been a constant topic of conversation and political angst back home—the result of galloping house prices that have become truly disconnected from income growth.

“The median price for an existing home in the United States is around $410,000,” Ben Carlson writes. “In Australia it’s more than $800,000. In Sydney, the median price of a home is well over $1 million. Homeowners in the US have experienced incredible gains over the past 30-40 years but we’ve got nothing on Australia—since the late-1980s, housing prices Down Under have more than doubled up our returns on homeownership.”

Around 2007, parts of America were undergoing their own Aussie property surge. Fueled by the very ingredients that led to the global financial crisis in 2008—the loosening of financing rules to spur home affordability and Wall Street chicanery that followed—house prices were moving toward insane territory. Where we live just outside New York City, many properties are only today approaching valuations equal to sale prices achieved in 2005 and 2006.

Yet it feels more and more like Australia’s housing market is returning to pockets of the US. We’re house hunting here in the northeast, and the timing couldn’t be worse. The region has the nation’s worst imbalance between sellers and buyers, to the point where it feels like there are 20 bidders for every property. Frantic buyers are consistently pushing sale prices 25% or more above asking. Properties that should be condemned hit the market for $900,000 and sell for seven figures.²

It’s all the result of a perfect shit storm. From a low of 2.71% in December 2020, the average rate of a 30-year fixed mortgage has almost tripled to 6.65% today. Anyone lucky enough to lock in a mortgage in 2020 or 2021 doesn’t want to give up their cheap financing and even if they make out like bandits on selling, they can’t find (or afford) a new home to move to. Construction of new homes plummeted during the pandemic and hasn’t resumed, while the economic uncertainty generated by Donald Trump and his band of morons—not to mention the effect of tariffs on the price of construction material—is exacerbating everything.

We’ve unsuccessfully bid on two houses in the past month, both times presenting offers well above the asking price but at levels we could still (barely) justify. On the first, we were outbid by almost $200,000; the reality-detached price for the second is still to be revealed. Feeling poor isn’t great, and it may be time to detach ourselves from reality and keep renting until sanity returns.

The problem is no one knows when that may happen. A catalyst would be lower mortgage rates, which should induce homeowners feeling trapped by their cheap financing to come off the sidelines, better balancing demand with the supply of properties for sale. But Trump’s chaotic and economically incoherent first two months are threatening that, despite his constant demands that the Federal Reserve act.

On the one hand, interest rates reduced slightly during his first few weeks as the sum total of his actions raised fears the world’s biggest economy may go into recession (Trump is squandering the strong economy bequeathed by his predecessor, just as he blew the $400 million-odd his daddy gave him). Yet working against lower rates is the threat of inflation unleashed by his tariff frenzy, which is set to go into hyperdrive this Wednesday with his ironically titled “Liberation Day” (referencing tariffs on imported vehicles, Bill Maher joked the only thing it would liberate is Americans from their money).

So, where do things stand? America is hurtling toward a recession driving lower interest rates while inflation demands they be increased, all of which seems to suggest … the status quo. Of course, even that uncertain stability is subject to change: almost daily, Trump seems to declare something completely different and the markets and leaders globally are thrown for yet another loop.

I suppose the only consolation is it could be worse. Recall the house we missed out on that went for $200,000 over our bid? It ended up being sold for the equivalent of around $490 a square foot. The terrace house in Paddington? About $1,000 a square foot. I’ll cling to that—it’s probably the sole instance where someone living in the US can today say, “At least it’s not as bad as Australia.” Sorry, guys.

1. Granger is also reputedly the inventor of avocado toast. I can’t find the quote, but I recall reading an article where one of his daughters put him in his place on this claim to fame, basically saying smearing avocado on bread wasn’t exactly revolutionary. Classic.

2. As my fiancée likes to note when we look at some dodgy property with a seven-figure price tag: “On the north shore of Chicago, they’d call this ‘a tear down’.”

A note about whatever this is …

After writing a few thousand articles for newspapers and magazines, I spent a long time trying a bunch of other stuff. I guess I figured what came (relatively) easily must by definition be less valuable, so I wandered in the corporate wilderness, becoming increasingly frustrated and doing work that felt increasingly lousy.

Sometimes with age comes wisdom, and I’ve realized finding something (relatively) easy ain’t a bad thing. So, this is a space where I’m resurrecting writing for myself, on topics weird and wild and wonderful.

Posts will appear when the mood takes me, but I do try to be consistently inconsistent—sometimes it’ll be a couple of days between drinks; sometimes a week. But if you subscribe, you’ll get a email letting you know I’m ranting. Again.