July, 2008
Ownership Sums
Congratulations to Maca, who's just bought himself some digs. Fair dues to him, and I mean that. But never let me pass over an opportunity to poo on someone's parade. So here goes...
Maca says that they bought the house because "we figure we’re better off paying our mortgage than someone else’s mortgage." Is this true in the present climate? Is the property ladder the place to be when it's really a snake?
The way I figure it, putting aside all those intangible joys like trips to Ikea etc, the 'am I better off paying my own mortgage?' calculation ought to proceed according to the maxim that the fall in property prices minus the amount paid off the principal on the mortgage ought not be greater than the outlay in rent (by the way, I had this expressed in an equation a couple of minutes ago but decided that I'd never be invited to dinner parties again if I posted it. Truly I am a sad, sad person).
So, if the amount you spend on your rent is more than a fall in value of your house minus the amount you pay onto the principal on the mortgage then buy. If not, then rent. Or, to take an example: in the first year of a mortgage, assuming an average priced €300,000 house at 5.4% APR, you will only pay about €4,200 off the principal (and €16,000 odd in interest). In that time in 2008, the house will have fallen in value by €24,000 (about 8% according to Goodbody). So the purchase of a house is worthwhile if you would otherwise fork out €19,600 in rent in the year. That's €1,633 a month. Of course, you could buy a cheaper house. It's also not unlikely, if you are renting a house, that this calculation might work in favour of buying (well, that or renting somewhere smaller). On the other hand, you could be saddled with a higher interest rate on your mortgage than I've allowed for here. Either way, what is undoubtedly true is that part of the value of the house will simply disappear into thin air in 2008/9. And lots of the mortgage will go toward the upkeep of the bank's shareholders, not towards the principal on the loan.
In which case it's not unlikely that renting until prices bottom out would be better overall than paying one's own mortgage. Let someone else suffer the loss in wealth and then jump onto the ladder. Or at least that it's not automatically the case that you are better off paying your own mortgage from 2008 than you would be leaving it until 2010.
Bog Standard to Standard
Great news for all potential flat dwellers if all new minimum standards for rented accommodation listed in today's Irish Times are realised. It does come as a bit of a surprise, however, that these new standards are an enhanced version of standards issued fifteen years ago. It's the first that I and possibly most other students of the Nineties have heard of it.
My own Dublin flat renting lasted for a period of around 10 years and the hallmark of practically all dwellings was that they were dilapidated. What's more, we queued for the privilege. On one occasion, I was fortunate enough to spot an ad in Irish in the evening paper for bedsits off the South Circular Road. There was still a sizeable queue. The best thing about one particular bedsit was that the water immersion tank was in a cupboard in my room, so whenever the meter was cranked up a bit of extra heat was generated. This was needed, given the cracks in both windows and the hole in the ceiling. In another, the landlord reliably informed me that the heavy creatures I could hear hurtling alongside the water pipes at night were simply little field mice coming in from the cold! Family members have had equally insane experiences; one person cooked out of a cupboard for two years, another had a chipboard structure cum bathroom bang in the middle of her only room. I have often wondered since why we weren't even half tempted to complain. The reality of the situation was that there was very little choice until the late Nineties; it was squalor or nothing on a tight budget.
As students, we at least had the hope that one day the standard of our accomodation would move on to another level. However, for a large number of Irish people on low wages and newly arrived immigrants, there is no such reality in the Ireland of today. Furthermore, while the sub-standard dwellings of the nineteen nineties were reasonably cheap (stangely enough, given the demand), today's newspapers and online ads carry hefty rents for addresses which are still, patently, as run-down as ever.
So, here's hoping that in the very near future all rented bathrooms will be “provided in a room separate from other rooms by a wall and door and containing separate ventilation”, that heating will consist of “fixed appliances capable of providing effective heating and proper ventilation”, and that the facade and common areas of rented accomodation will “be clean and well maintained”. If not, let's hope the flat dwellers of today are more aware of their rights and less afraid of pursuing them.
Eh Joe
Atom Egoyan's haunting stage production of Samuel Beckett's television play Eh Joe was one of the most striking elements of the Beckett centenary at the Gate Theatre in Dublin a couple of years ago. Well, it seems it's been brought to New York , with Liam Neeson as Joe (Joe was played by Michael Gambon in Dublin and London). You can get a small sense of the play on this New York Times slide show, but if you're in NYC you really ought to go along and see it on its own or preferably as part of a package.
12
And a happy Glorious to you!
Lies, Damn Lies and Cogging Conservative Websites
There's more from Michael O'Driscoll in today's Irish Times letter's page. He has come back with the same irrelevant claims he made last time and the usual bizarre notion that a move from discrimination to equality is a zero-zum game. Still, fair dues to him for answering the claim that he hadn't provided evidence on his claims that homosexuality leads to greater levels of domestic violence and the like. He does answer it in this letter, though not in his own words. His research, it seems is based on a series of studies, misquoted with abandon all over the right-wing internet (including in this wonderful brief (pdf) from United Families International).
Of course I wouldn't for the life of me suggest that O'Driscoll is himself doing the misquoting. For instance, he says that
The homosexual authors of Men Who Beat The Men Who Love Them also claimed that domestic violence affected half of all gay couples.
Strange: I've looked and the book says absolutely nothing of the sort. It does engage in some surmising about domestic violence rates but not actual measurement. How can O'Driscoll be so confused? Maybe he hit on this site (a Canadian pro-life outfit by the looks of things) which lifts, with permission, a 2004 article that states that
According to the homosexual authors of Men Who Beat The Men Who Love Them, domestic violence affects half of all gay couples.
Interesting. Is this the first ever cogging of a misquote of a misrepresentation in the Irish Times?
read the rest of this post »Fair Trading
There's a good interview with John Fingleton in today's Times. I think Fingleton lectured me when I was an economics undergrad, before he moved on to the Competition Authority. He always seemed like a very nice guy. Anyway, he's now chief executive of the UK's Office of Fair Trading and is doing an excellent job to my mind.
The best line in the interview has him reflecting on his relative anonymity, where most people seem to think that the OFT has something to do with coffee:
'It was the same when I was in Ireland at the Competition Authority,' he says. 'We had schools writing in asking what competitions we were organising.'
Camp Followers
The post-industrial age brings a new kind of camp follower I suppose. Gone are the families, farmers and prostitutes. Now the hangers on are telecoms engineers. Well, I suppose Libertas at least had the tactical nous to leave the fight for Irish neutrality to the people with a private army (yes: my sulk continues...).
Dredd
And now this:
Supreme Court Rules Death Penalty Is 'Totally Badass'
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