Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Maybe treating housing as an investment was a mistake

goodreason.substack.com

Post reply on HN
Print view View original

41–50 of 1001 posts

Re: Maybe treating housing as an investment was a mistake

#41

Post by recursivedoubts »

It's all so tiresome.

Watching boomers pop champagne corks as their homes went astronomically high and their children were priced out of ever living in the middle class neighborhoods they grew up in in CA, and now watching them eat that equity down with reverse mortgages, has made me permanently disgusted with the US housing market.

The only solution I can see is absolute carnage in the housing market, and probably the entire financial system failing. And I'm kind of rooting for that, even though I own a home and financial assets: I have children, and I'd like for them to not be in perpetual two-earners + debt slavery in order to afford what their grand parents were able to afford on one salary.

Re: Maybe treating housing as an investment was a mistake

#43

Post by endisneigh »

As long as land has different levels of productivity it's impossible to not make housing an investment. The only solution are exponentially increasing taxes on land, in order to ensure that land usage is always used in tandem with the potential productivity (which has its own issues), or make most housing nationalized like Singapore.

In the end, for better or for worse, the issue is a dissonance between the struggle of renters and political activity. Homeowners do not make up the majority of the electorate (though interestingly the majority of households "own" the household in which they reside). You'd think that renters would the laws in their areas reflect their will, but alas, renters have low voter turnout.

Re: Maybe treating housing as an investment was a mistake

#44

Post by goosedragons »

last_responder wrote: post #30
mjr00 wrote: post #10

> While the rich are more likely to own homes, tons of middle class and poor people also bought homes and planned their lives under the assumption that housing prices would go up. Tanking housing prices would destroy their trust in the system that they bet everything on. This is pretty much the crux of it. High housing prices could be "fixed" almost overnight, but for almost every citizen of the first world, their ho…

>You'd be destroying everyone's retirement plans Everyone?

The majority homeowner class. Which is why politicians enabling it keep getting voted in.

Re: Maybe treating housing as an investment was a mistake

#46

Post by nerdponx »

mjr00 wrote: post #10

> While the rich are more likely to own homes, tons of middle class and poor people also bought homes and planned their lives under the assumption that housing prices would go up. Tanking housing prices would destroy their trust in the system that they bet everything on. This is pretty much the crux of it. High housing prices could be "fixed" almost overnight, but for almost every citizen of the first world, their ho…

What I think would help at least is if prices stopped increasing. That way, people who buy now at least won't lose money, but the expectation that valuations will continue to go up will have to taper off.

Also, in the case of high-cost coastal cities, I don't think the issue is trust in government propping up prices, as much as it's trust that demand will continue to outpace supply for the next several years at least.

Re: Maybe treating housing as an investment was a mistake

#47

Post by hammock »

rcme wrote: post #12

Buying a house is an investment. You're making a bet that worker productivity will improve near you. After all, what is the value of land? Some land can be farmed or house a factory. But usually, when we talk about residential real estate, we're talking about land that houses workers. So, the value of that land is directly proportional to the economic value those workers can provide. We refer to "economic value provi…

Is worker productivity going up?

Re: Maybe treating housing as an investment was a mistake

#48

Post by codegeek »

mdgrech23 wrote: post #27
photon12 wrote: post #6

> Meanwhile, renters are desperate. They’re begging for housing prices not just to slow, but to fall. I have a friend who is a head chef at a decently popular bar and restaurant on Broadway in Capitol Hill, Seattle (very trendy part of town if you aren't familiar, steep commercial rent). He lives in a 400 sq ft studio and is barely, barely making it from one paycheck to the next. I am sitting on a 2.6% interest rate…

I majored in economics and it still boggles my mind what we make as software engineers versus the guy who unclogged my sewer drain allowing me to use the toilet.

You will be surprised how much good plumbers make in the USA. You probably used a bad example.

Source: I know my trusted plumber makes well over six figures a year and he cannot take all calls. I asked him once if he has problems generating leads and he smiled saying "I have too much business that I turn people away". He is a "master plumber" which these days is not easy to get certified for in many states. He told me he cannot find enough skilled master plumbers to help him (state of NJ).

Re: Maybe treating housing as an investment was a mistake

#49

Post by svachalek »

Idiot_in_Vain wrote: post #18

I haven't played with the NY times calc, but is the following correct: Housing prices only keep pace with inflation. America realizes it totally forgot about a few million homes it built, greatly expanding supply. Housing prices rise only 2%. Alice is much, much worse off for buying. In total, buying costs ~$1.75M, where renting would have cost her ~$1.3M. Because her finances were tied up in the house while the home…

Principal is only part of the cash flow. You're also paying for interest, insurance, taxes, and maintenance, which the renter does not, and these are also money down the drain. In my experience, owning a house in many (most?) areas is a losing proposition unless you assume that housing prices rise at an unreasonable rate for a long period of time. However, that's exactly what's happened.
Post reply on HN