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Why the government took home prices out of its main inflation index

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Re: Why the government took home prices out of its main inflation index

#331

Post by Geonode »

1270018080 wrote: post #325
Geonode wrote: post #307

Earlier quoted context omitted.

A single family home is the ideal, period. Ideally with ten or more acres. Some people would increase density until we're all living in Blade Runner hoping it would make rents drop.

If your goal is for housing to be affordable for the average person, a single family home is never the ideal for any piece of geography. It just comes down to priorities.

Saying it twice doesn't make it less wrong. The priority is never packing as many people as possible into a given area. Its quality of life.

Re: Why the government took home prices out of its main inflation index

#332

Post by adam_arthur »

CincinnatiMan wrote: post #322
adam_arthur wrote: post #277

Earlier quoted context omitted.

You can do a cash out refi and invest into other higher yielding cashflowing assets. People do this all the time for e.g. renovations, additions etc

You eventually have to pay that back though, right? So the benefit is fleeting.

If you cash out refi at 3%, and invest into 6% yielding asset, then you are permanently making 3% extra return on that money.

(of course there's risk etc)

Re: Why the government took home prices out of its main inflation index

#333

Post by faangiq »

jdashg wrote: post #305
mtoner23 wrote: post #202

Earlier quoted context omitted.

the 30 year mortgage was one of the greatest financial innovations of our time. Allowing anyone to pay off 2022 costs in 2052 dollars. I understanding hating credit card debt, buy now pay later, and other horrible "financial engineering" but the 30 year mortgage is overall a great thing for everyday people.

If everyone gets the benefit, does anyone really get the benefit? In a zero-sum game of prospective home owners bidding against eachother, if both of two opponents the option of longer mortgages, does affordability actually increase? The sticker price just gets bigger.

Well, now you have a layer of banks collecting interest on what was previously a cash purchase at 1/100 the price. So, yes, someone is winning this game.

Re: Why the government took home prices out of its main inflation index

#334

Post by chii »

TimPC wrote: post #324
chii wrote: post #304

Earlier quoted context omitted.

> For instance, after paying off a mortgage entirely, my housing costs will be effectively repairs, property tax and utilities. That's a tiny fraction of rent. no, if you paid off the mortgage, then the cost of your "rent" is just the cost of the capital sitting in the house (plus those maintenance costs you mentioned). There's no such thing as free living. it is possible that rent is more expensive - but over time,…

In a world of zoning and NIMBYs I very much doubt the market adjusts in any way that resembles an efficient market. At most the portion of the rent I get from my capital is the difference between deploying the capital in the market and the return to housing. Since housing has historically beat the market that suggests a zero or negative rent for investing in housing.

> Since housing has historically beat the market

this is not true unless you only start counting from the past 10-20 years, and only include regions that _did_ beat the market, rather than globally.

see https://www.youtube.com/watch?v=7rvY2rIxdsA

Re: Why the government took home prices out of its main inflation index

#335

Post by antifa »

lupire wrote: post #200
dont__panic wrote: post #43

Earlier quoted context omitted.

High housing prices == high rental prices == people living in smaller spaces == people deciding to have fewer or no kids because they don't have the space (or money). Of course, plenty of people start families without solid economic footing. But it's a bit harder to invent space out of thin air than it is to take on debt.

How big was the house your grandmother lived in with 5 siblings? Less than 1500sqft Houses are something like more than double the size they were just 40 years ago, and families are smaller.

Last time I was shopping for houses 1500sqft homes were rarely more than $5k cheaper than equivalent 2000sqft houses.

Re: Why the government took home prices out of its main inflation index

#336

Post by cudgy »

imtringued wrote: post #309
cudgy wrote: post #302

Earlier quoted context omitted.

Blackrock doesn’t have any lobbyists? Apartment consortiums don’t have lobbyists?

Homeowners outnumber them and local politicians listen to them more than to some far away group of people in NYC. Really it is quite simple, homeowners vote in tax cuts for themselves which also apply to landlords.

Why would homeowners vote tax cuts for landlords as well? I wish that the politicians listened to the citizens. You have a very naive take on politicians and how they are motivated. Think campaign donations and hobnobbing for a cushy job when they leave office —- that’s what motivates politicians.

Re: Why the government took home prices out of its main inflation index

#337

Post by cudgy »

credit_guy wrote: post #330
cudgy wrote: post #329

Earlier quoted context omitted.

Land should also go down (generally) in price though if the supply of buildable land goes up along with reduced supply restrictions. Of course, this only works in areas where there is abundance of buildable land near the desirable locations or nearby buildable areas that provide a decent substitute. Obviously, areas like the San Francisco peninsula and Manhattan where there is limited land due to surrounding water, l…

Manhattan is surrounded by water, but guess what, there are subways that go to Brooklyn, Queens, the Bronx, Jersey City and Hoboken. If your office is in downtown Manhattan, you can get there faster if you live in Brooklyn than if you live in Haarlem (which is part of Manhattan). In principle the supply side has natural constraints, but they are easily 2 times above what has been built until now. You can think of it…

We agree. Those would be “nearby buildable areas that provide a decent substitute”.

Re: Why the government took home prices out of its main inflation index

#338

Post by mschuster91 »

mupuff1234 wrote: post #188
mschuster91 wrote: post #174

Earlier quoted context omitted.

> If people stop believing housing is a good investment then prices will fall. People need something to live in though, and as long as the demand for places to live is higher than the supply, rents and purchase prices will keep going up.

The population hasn't increased much (or maybe at all) in the last 2 years yet prices have sky rocketed - why is that?

Would you choose to invite a recurring thousands-dollars-a-month expense in a time of economic uncertainity?

Children are expensive AF - childbirth alone is a risk of dozens of thousands of dollars, you need more living space, clothing, diapers, food, more doctor visits, the person bearing the baby may not be able to work for a time which means less income, you need babysitters, ...

Re: Why the government took home prices out of its main inflation index

#339

Post by everybodyknows »

lazide wrote: post #121
chii wrote: post #98

Earlier quoted context omitted.

not the same - a mortgage require a deposit. Renting will be cheaper, because a deposit is basically a capital cost (that people comparing renting and buying don't take into account).

A common problem with rent control (can’t raise rent to match market) in cities is the landlord stops doing maintenance or starts moving in folks who are dangerous or threatening to tenants to get them to leave.

> starts moving in folks who are dangerous or threatening to tenants to get them to leave

Seems a high risk, desperate maneuver. What's the end-game for the landlord? A building full of drug dealers, in perpetuity? Keeping maintenance up to city code could be a burden, and the insurance company might start to get wise.

Re: Why the government took home prices out of its main inflation index

#340

Post by PowerBar »

bombcar wrote: post #170
leoedin wrote: post #44

Earlier quoted context omitted.

The point isn't that you can't start a family without owning a home (obviously that's untrue) but that many people won't want to start a family while living in the relative instability of rented accommodation. That's almost certainly true - I definitely had buying a home as a pre-requisite to starting a family (and I don't regret that decision). There's always going to be some babies, but it's the societal level fert…

> The point isn't that you can't start a family without owning a home (obviously that's untrue) but that many people won't want to start a family while living in the relative instability of rented accommodation. The amusing part of it is that small children are the most amenable to moving, it's not until they're a bit older and getting into school that moving becomes a real problem for them. Fertility rates are low e…

> The amusing part of it is that small children are the most amenable to moving, it's not until they're a bit older and getting into school that moving becomes a real problem for them.

Children are expensive. If you can't currently afford to buy a house and decide to have a child, the chances of you gaining enough wealth to afford one in the 4 to 6 years before your child reaches school age is practically nonexistent.

This means having a child while renting basically pushes your home ownership plans back by probably about a decade.

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