Maybe treating housing as an investment was a mistake • Hacker News Board

Re: Maybe treating housing as an investment was a mistake

#61

Post by dangwhy » Mon, Mar 06, 2023, 5:25 PM UTC

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 am sitting on a 2.6% interest rate mortgage and my prices are set for the next 30 years. I probably work half as hard as he does, if not even less than half.

If i follow this correctly. you will work half as hard because your housing costs are set while his will keep increasing ?

Re: Maybe treating housing as an investment was a mistake

#62

Post by andrewmutz » Mon, Mar 06, 2023, 5:26 PM UTC

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 and there'd be major economic repercussions

I think that exaggerates it. Most retirees aren't profiting from the home they own if they live in it. The "income" from it is just imputed rent. So if the housing supply increases dramatically, that imputed rent drops, but it doesn't matter since the cost of housing drops as well.

Re: Maybe treating housing as an investment was a mistake

#63

Post by yeahwhatever10 » Mon, Mar 06, 2023, 5:26 PM UTC

photon12 wrote: post #38

lotsofpulp wrote: post #20

Earlier quoted context omitted.

Cognitive dissonance means harboring contradicting thoughts. The difference in you and your friend’s situation is caused by the fact that they are selling labor which has a much lower price than the labor you are selling. This is not contradictory, just a consequence of supply and demand.

Yes, there is an inconsistency in the amount of effort expended to survive versus the outcomes of that effort. I can't reconcile them in my head. I'm watching my friend trying not to physically deteriorate and have some modicum of comfort while I sit here on my couch living off savings from the job I recently quit. Nothing I do can be so much more valuable than what he does.

The correlation between effort expended and outcome is misguided. The plow takes more effort than the tractor and produces a worse outcome.

Re: Maybe treating housing as an investment was a mistake

#64

Post by davidw » Mon, Mar 06, 2023, 5:26 PM UTC

pradn wrote: post #25

It's practically impossible for US society to get out of treating housing as an investment. Americans believe in home ownership as evidence of prudence (hard work + savings), acumen (housing always goes up so it's smart to buy a house!), and sense of security and achievement. These ideas aren't going to change any time soon. That's the ideological component. Home-owners also protect their investments because they're…

> But it's hard to see evidence of much political will to solve these problems.

Disagree. The YIMBY movement is picking up steam in a big way. Here in Oregon, we re-legalized 4-plexes in our cities and the woman responsible, Tina Kotek, is now our governor. She's pushing another big housing bill. Our mayor in the city I live in regularly attends our YIMBY group meetups.

It's gotten bad enough in enough places that there's a lot of interest in reform.

Some good groups to check out:

* https://yimbyaction.org/

* https://welcomingneighbors.us/

Re: Maybe treating housing as an investment was a mistake

#65

Post by dangwhy » Mon, Mar 06, 2023, 5:26 PM UTC

codegeek wrote: post #48

mdgrech23 wrote: post #27

Earlier quoted context omitted.

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 m…

Yes I have family who make ~100k in chicago.

Re: Maybe treating housing as an investment was a mistake

#66

Post by pxmpxm » Mon, Mar 06, 2023, 5:26 PM UTC

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…

> bet that worker productivity will improve near you

There's also a huge positive externality of people actually having skin in the game in that regard - all the sudden you have an incentive to making sure that productivity improvement actually happens.

Re: Maybe treating housing as an investment was a mistake

#67

Post by sgt101 » Mon, Mar 06, 2023, 5:26 PM UTC

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?

yes I agree. I was always told, and believed "a house is for living in, not an investment". It figures in my retirement plans in the sense of not having to pay rent on my house as I will own it. That is really positive because it also means not having to pay tax on the money that I would have to have to pay rent.

But I bought it because I wanted to own it and live in it, not to sell and make money off.

Having said that it's obvious that the availability of cheap money has jacked up housing costs to a stupid level, and it's obvious that when it unwinds there is going to be a big mess. What stops it from unwinding - immigration... because as soon as immigration stops the pressure will go out of the housing market and a-la Japan houses will get cheap.

Re: Maybe treating housing as an investment was a mistake

#68

Post by voisin » Mon, Mar 06, 2023, 5:26 PM UTC

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.

The fruits of your labour can be sold continuously at low marginal cost. His cannot.

Re: Maybe treating housing as an investment was a mistake

#69

Post by zachthewf » Mon, Mar 06, 2023, 5:26 PM UTC

Lately I've been thinking that perhaps the solution to the housing shortage is a technology that makes it easy, cheap, and extremely fast to build housing that is both attractive and illegal.

Uber and Airbnb were both pretty much illegal from the get go, but ultimately worked because they were incredibly popular. They forced the laws to change to accommodate what people actually wanted.

Similarly, living in tents and RVs on city streets is illegal but common because RVs and tents are so easy to set up.

No one builds an illegal fourplex because it takes a year and a million dollars. It's too expensive to shoulder the shutdown risk. But what if it took a day and $100k?

Re: Maybe treating housing as an investment was a mistake

#70

Post by ianlevesque » Mon, Mar 06, 2023, 5:26 PM UTC

svachalek wrote: post #24

beebmam wrote: post #8

Earlier quoted context omitted.

China has an enormous amount of housing. Their prices are still sky high

There's a huge cultural difference there though -- people don't trust stocks, bonds, or bank accounts. Housing is the only investment most people will consider.

Nor should they, cultural or not. Look how the government destroyed the Ant group recently. When they can unilaterally do that, how can you find a safe stock?