Home ownership is the West’s biggest economic-policy mistake • Hacker News Board

Re: Home ownership is the West’s biggest economic-policy mistake

#391

Post by effingwewt » Tue, Apr 20, 2021, 3:58 PM UTC

chii wrote: post #243

scambier wrote: post #186

Earlier quoted context omitted.

Are you seriously comparing owning shares with taking advantage of the need to have a home to take ~30% of someone's monthly income?

they are very comparable. Owning shares in a company that takes money to provide essential services? That has been the model of capitalism - fee for service - for a long time, and it has worked. The service gets provided, at the right price that the market can bear ,and still produce a profit for those providing the service. The alternative is to not have that service provided at all!

Then please stop providing the service.

If we had no landlords renting we would all own domiciles.

So please, stop providing these 'services'

Re: Home ownership is the West’s biggest economic-policy mistake

#392

Post by fogihujy » Tue, Apr 20, 2021, 4:08 PM UTC

emteycz wrote: post #354

fogihujy wrote: post #345

Earlier quoted context omitted.

My original point was just that; public housing is not something you just do with a one-time investment, and it requires a serious long-term commitment to keep it viable. I agree that many of the previous projects failed to commit to keeping those buildings in shape and I also doubt that any modern democracy would ever commit to such endeavours in the future; nobody wants to make very expensive, very long-term promis…

You said that "very little was built or maintained after 1989". The exact opposite is true - before 1989 there was a moderate amount of newly constructed incredibly dangerous and toxic buildings violating every urbanistic rule and past plans that were a major downgrade from pre-war comfort (keep in mind that these buildings were built in 1970's, 30 years after the war); and there was absolutely zero maintenance, any…

No, that was the guy responding to my post. :)

Re: Home ownership is the West’s biggest economic-policy mistake

#393

Post by pbhjpbhj » Tue, Apr 20, 2021, 4:10 PM UTC

dslkfjg wrote: post #344

andrepd wrote: post #282

Earlier quoted context omitted.

> Most homes are purchased for the purpose of living in them. [citation needed]

The number of people who buy homes to live in them greatly exceeds the number of people who buy homes as investments. That seems obvious to me. The only way most housing could be investment property is if investment vehicles each had so many houses, literally tens or hundreds of thousands, that their total ownership exceeded that of ordinary people . As it turns out, this is not the case: https://www.statista.com/sta…

Perhaps the parent is suggesting that people might only buy because it's also an investment and would otherwise rent?

FTSE100 appears to have doubled in 20 years, my house in a poor UK city has quadrupled in value. Starting wages have increased by about 70%.

Re: Home ownership is the West’s biggest economic-policy mistake

#394

Post by hnnameblah365 » Tue, Apr 20, 2021, 4:14 PM UTC

nemo44x wrote: post #288

hnnameblah365 wrote: post #260

I would pin the failure on how we view home ownership as an investment vehicle. There's little inherently appreciable to a building. In fact they depreciate over time and require constant investment to maintain. The location however can appreciate, which we all agree on. But we never say out loud the underlying mechanism. Locations appreciate in value specifically because more humans want to own it. Viewing homes as…

Structures don’t necessarily depreciate in value over time if maintained. The costs of materials and labor increase allowing an existing structure to maintain value and appreciate. Have you seen how much a 2x4 costs today? $8! When my home was built that piece of wood cost 5 cents. So the value of the structure is what it would cost in terms of parts and labor today minus existing wear-and-tear and needed repairs. Of…

The other way I thought of that the building itself appreciates is if the craftsmanship style becomes antique or vintage down the line. Or the architect becomes notable, etc.

Re: Home ownership is the West’s biggest economic-policy mistake

#395

Post by janekm » Tue, Apr 20, 2021, 4:14 PM UTC

mustyoshi wrote: post #256

janekm wrote: post #247

Earlier quoted context omitted.

Having to pay >60% of monthly salary on a mortgage for the next 25 years isn't exactly my definition of financial freedom. If the market crashes you have no freedom to move for opportunities elsewhere. Here in London, rent is <50% of mortgage payments on an equivalent property.

”60% monthly salary on a mortgage" I think everyone would agree that that is not financial freedom, but it's commonly accepted and taught that your rent/mortgage shouldn't be more than 30% of your take home.

That was my poorly made point, indeed... It can be more sensible from a financial freedom point of view to rent at 30% of take-home pay than mortgage at 60%.

Re: Home ownership is the West’s biggest economic-policy mistake

#396

Post by a0-prw » Tue, Apr 20, 2021, 4:14 PM UTC

I don't know about the macroeconomics of this issue, but I am SO happy to be free of my house: Constant house maintenance (remember to price that into the cost), cutting the grass once a week in summer and shovelling snow off the sidewalk in winter, pruning trees, insurance, always worried in storm season that a big wind will take the roof off (as happened to many of my neighbours). Home ownership is a dream lots of young people have (as I had), but I think it's a pipe dream. You'll be a slave to your monthly payments wether it's a mortage or rent you're paying. I have far more freedom and less worries now.

Re: Home ownership is the West’s biggest economic-policy mistake

#397

Post by throwaway34241 » Tue, Apr 20, 2021, 4:14 PM UTC

coldtea wrote: post #365

bovine3dom wrote: post #313

Earlier quoted context omitted.

Yeah, within reason, more global considerations should be taken into account when making local decisions.

Sure, when the local desicions have outside externalities (e.g. pollution). But this is a case where we're taking about outsiders making it more difficult for locals to hold to their homes, so they (the outsiders) have it easier to live in some place. How is that OK? Ousiders "really" wanting to live to that place is not enough justification (people want lots of things. Many people want a pony too, doesn't mean they…

You could easily solve the immediate problem by exempting locals' primary residence - CA already has policies like prop 13 after all.

More generally, who could reasonably be considered to have a legitimate interest in housing policy? I can think of a few potential groups:

1) People who own homes in the locality

2) Renters

3) People who work in locality but commute

4) (This is the biggest stretch) People left behind by economic geography

On economic geography: as the economy evolves over time, the location of jobs changes. As farming is automated, there are less jobs in the rural Midwest. After the steel mills closed, Pittsburgh lost population. As the economy has become more knowledge and technology oriented, more jobs have moved to relatively dense urban areas that can support very liquid job markets and a high degree of labor specialization.

Obviously there's a lot of subjective trade-offs here. Personally, I feel there should be a middle ground (on policies around development) between "kick existing residents out of their homes" and "no middle class housing in areas with lots of job growth".

Re: Home ownership is the West’s biggest economic-policy mistake

#398

Post by jimbob21 » Tue, Apr 20, 2021, 4:17 PM UTC

effingwewt wrote: post #391

chii wrote: post #243

Earlier quoted context omitted.

they are very comparable. Owning shares in a company that takes money to provide essential services? That has been the model of capitalism - fee for service - for a long time, and it has worked. The service gets provided, at the right price that the market can bear ,and still produce a profit for those providing the service. The alternative is to not have that service provided at all!

Then please stop providing the service. If we had no landlords renting we would all own domiciles. So please, stop providing these 'services'

If we had no grocery stores we would all own farms. Please stop providing these services

Re: Home ownership is the West’s biggest economic-policy mistake

#399

Post by pbhjpbhj » Tue, Apr 20, 2021, 4:23 PM UTC

throwaway316943 wrote: post #353

chii wrote: post #310

Earlier quoted context omitted.

> Did the owner construct the land? The land itself had to be acquired somehow. The very first owner paid for an army to take the land from the indigenous population that "owned" it, and that "cost" is a chain that is linked all the way to today (and at every step of the transaction, somebody profits by increasing the price a bit). So either you raise another army today (at an even greater cost) to acquire the land,…

It’s not just the acquisition of the land but also the investment in the economy that surrounds the land. All land starts out near worthless and in the middle of no where. Generations of sacrifice and investment are what turns it into a highly valuable property. That process can also reverse if the owner ceases to improve the property and invest in the community.

>All land starts out near worthless and in the middle of no where. //

No. People don't raise armies to steal land that's worthless. If you're going back to pre-history then the land near a nice river that has plenty of game, isn't predated by larger animals, and has nice fruit trees is worth way more to a person than some section of desert.

If right to live on land also goes with rights to exploit resources beneath the land then disparities in value as you approach the industrial era become massive.

Re: Home ownership is the West’s biggest economic-policy mistake

#400

Post by nemo44x » Tue, Apr 20, 2021, 4:32 PM UTC

Ekaros wrote: post #329

nemo44x wrote: post #319

Earlier quoted context omitted.

The materials and labor required to build them gets more expensive though. So while the materials wear down over time, those same materials get more expensive. And some of those materials, especially structural, will last a long time if taken care of. Furnaces, water heaters, etc go to 0. But foundations, framing/walls, flooring, etc can last hundreds of years.

Part of it is increased size of properties. And increased regulation. But I wonder what are we doing as civilization if the building materials aren't cheaper. Why haven't we gained significant efficiency gains there? Labour really should be in inflation though...

There’s a lot more global demand than before. Homes are made of natural resources like wood and there’s only so much we can harvest and use for construction.

I think we have made some improvements though. It isn’t necessary to build with copper pipes any longer. New construction relies on PEX piping which is cheaper, should last longer, is easier to install and to replace.

But this is just the structure. The cost of flooring, tiles, fixtures, and appliances adds a lot too.