181–190 of 194 posts
Earlier quoted context omitted.
However, you can't ignore the fact that homes have real tangible value and limited supply. As long as this is true, they will be a store of value.
> limited supply You can build 8-15 new houses in about a month for what it costs for one outside of LA.
Earlier quoted context omitted.
No. There is no perfect system. That doesn't mean you don't implement systems. You just police them better to make sure that kind of problem doesn't happen any more.
Hard to find problems with a system that doesn't exist, so perhaps some "systems" are perfect.
Applied to any useful purpose, though, there are externalities and there is the unexpected. If you include those externalities in your model, you not only have a more complicated model, but you probably have an even larger surface of externalities.
It is an amazing contrast with the situation when I was younger. House prices were bounded by wages and were understood to be depreciating assets. That is, without constant investment they lost their value and became unusable and difficult to trade. Even in the best of times it takes time, preparation, and fees to sell real estate. Landlording was a rich person's game because of the risk involved and if you really wa…
> House prices were bounded by wages and were understood to be depreciating assets. When was this ever true? If you literally abandoned a house and let it rot then yeah maybe in ten years it will have lost value because it will need a lot of work, but other than that I think it's never been the case they're depreciating in any meaningful sense.
Earlier quoted context omitted.
> House prices were bounded by wages and were understood to be depreciating assets. When was this ever true? If you literally abandoned a house and let it rot then yeah maybe in ten years it will have lost value because it will need a lot of work, but other than that I think it's never been the case they're depreciating in any meaningful sense.
Detroit would like a word with you… https://tinyurl.com/Detroit-2009-to-2019
You don’t say that your oil painting has depreciated because it was damaged in a house fire. Property in Detroit has been ‘damaged’ by social decline.
Earlier quoted context omitted.
Regarding lack of margin calls, is there truly no way for the lender to renegotiate or get out of the contract if the market value of the collateral depreciates too much? And well before the borrower fails to meet interest payments?
The first thing to know is that there really is no "lender" in the traditional sense. The first form of banks we had we had had depositors deposit money for safekeeping. Banks would then lend that money out to earn interest. We then basically decided this was too conservative a strategy so we have fractional reserves , meaning if you have $100,000 in deposits you might be able to lend out $1 million. A lot of Crypto…
This is entirely wrong. Fractional reserve banking is what allows lending. How do you envision a bank with $100k lends out $1m? What fractional reserves mean is the opposite: if you have $1m of deposits you can lend out $900k and only be required to keep $100k of reserves to meet withdrawal demands. This is the “fractional” bit of fractional reserves.
Honestly HN please, go and learn the basics before penning comments that lack basic understanding.
Earlier quoted context omitted.
So, if houses were to become investments on a massive scale, and -- as seems inevitable -- they ended up in the hands of only a few, does that change the politics of housing supply? Before, your neighborhood's voters were homeowners who benefit from rising property values; after, they're renters who benefit from falling rents. I've heard that Germany has more of this renting situation but no idea about the politics o…
Renters are so much less likely to be voters that this has little impact. In Seattle, for instance, municipal elections are on odd-numbered years. As a result, get out the vote operations that tend to increase renter turnout during presidential elections don’t have much impact on local elections. We had a vote in the 90s that reduced housing supply considerably, “Citizens Alternative Plan.” It was a February special…
This, however, does not mean it is causal. Just because it's the case at the moment does not mean it would be the case if homeownership dropped 50%.
Earlier quoted context omitted.
To add onto this, many buying realtors will not show a house to their client that is for sale by owner. They know they won't get their cut of the commission so they leave it out of the options. They will only visit if their client specifically finds it and brings it to them.
Always trips me up hearing about how house sales work in the US. Soo inefficient and many people involved that need their fees. And is the inspection done after, by the buyer?? Why isn't it done by the seller and included in the ad? That's mandatory here. Sounds like a recipe for disaster and conflicts.
You can make money flipping houses. However it becomes a job and you need to treat it like one. You have to invest in the right house, a house that only needs paint and it will sell for a thousand profit vs a house that needs to have the main beams replaced to get $50000 profit. The above numbers are real required profit because of the risk you are taking, and also the time that you own the house paying intrest waiti…
This kind of extremely risky approach to earning money, where one mistake ruins you, is colloquially referred to as "gambling."
It is an amazing contrast with the situation when I was younger. House prices were bounded by wages and were understood to be depreciating assets. That is, without constant investment they lost their value and became unusable and difficult to trade. Even in the best of times it takes time, preparation, and fees to sell real estate. Landlording was a rich person's game because of the risk involved and if you really wa…
This really is a situation that's almost too big to fail. Let me explain. First, since so many voters are invested in the housing market, it's almost political suicide to do anything about it now. Protection and even increasing property prices has become an explicit political goal on every level. Second, as you see more and more corporations enter this market and become stakeholders, this trend is only strengthened a…
Earlier quoted context omitted.
The first thing to know is that there really is no "lender" in the traditional sense. The first form of banks we had we had had depositors deposit money for safekeeping. Banks would then lend that money out to earn interest. We then basically decided this was too conservative a strategy so we have fractional reserves , meaning if you have $100,000 in deposits you might be able to lend out $1 million. A lot of Crypto…
> Banks would then lend that money out to earn interest. We then basically decided this was too conservative a strategy so we have fractional reserves, meaning if you have $100,000 in deposits you might be able to lend out $1 million. This is entirely wrong. Fractional reserve banking is what allows lending. How do you envision a bank with $100k lends out $1m? What fractional reserves mean is the opposite: if you hav…
From https://en.m.wikipedia.org/wiki/Fractional-reserve_banking
Fractional-reserve banking is the system of banking operating in almost all countries worldwide,[1][2] under which banks may hold liquid assets representing only a portion of the deposits that they are liable to pay.[3] These liquid assets, known as reserves, may include cash in the bank or balances in the bank's account at the central bank. The country's central bank determines the minimum amount that banks must hold in liquid assets, called the "reserve requirement" or "reserve ratio". Most commercial banks hold more than this minimum amount as excess reserves.
When a loan is made by the commercial bank, the bank is keeping only a fraction of central bank money as reserves and the money supply expands by the size of the loan.[5] This process is called "deposit multiplication".