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

71–80 of 1001 posts

Re: Maybe treating housing as an investment was a mistake

#71

Post by eloisant »

There is nothing bizarre about house appreciating despite being used when you realize that it's not the house that appreciate, it's the land.

The land your house is build on doesn't get wear-and-tear, 100 years ago or 100 years from now it's still the same number of m2 of land. And it's getting rare because the population is still increasing and everyone want to live in the same big cities.

If you find it ridiculous that everyone pays a fortune to live packed together (it kinda is) just buy a house in rural Alabama! It will be super cheap.

Re: Maybe treating housing as an investment was a mistake

#72

Post by lotsofpulp »

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.

One can define effort in that way, and arrive at the conclusion you did, but it is not what cognitive dissonance is typically used to mean.

But that definition of effort as it relates to the ability to “survive” does not seem useful to me. It takes a lot of effort to manually dig a ditch compared to using an excavator, but you would not pay the person that shows up with a shovel more than the person that shows up with an excavator.

Edit: this is not intended to say your friend does not deserve a better pay to quality of life (QoL) ratio. However, the fact that you have a comparably favorable pay to QoL and they have an undesirable pay to QoL ratio means society does not want more people to be selling that labor, but rather more people to be selling your labor.

Re: Maybe treating housing as an investment was a mistake

#74

Post by notyourday »

oldstrangers wrote: post #28
koolba wrote: post #4

The biggest real world advantage for the average person for buying a house is forced savings. If a mortgage is $3K and rent is $2K per month, Joe Sixpack is not going to save $1K in a sinking fund. He’s going to spend some extra non-zero portion of that money. So in the long run, for average real consumers, not a theoretical economically minded consumer, a mortgage forces frugality.

Rental payments are higher than mortgages in most large cities. And those renters usually can't even qualify for a mortgage, despite paying more in rent.

There's a very simple solution to this problem:

* any and every landlord immediately pays taxes based on the asking rent, no matter what rent it is.

If a landlord is asking $2500/mo for something, the government immediately values the property based on whatever the formula is based off the asking rent, even if the landlord cannot fill the space.

Re: Maybe treating housing as an investment was a mistake

#76

Post by mfer »

Homes are incredibly complicated...

- I know people who rent who have had their period end by the owner. The owner plans to "update" the place and rent it for a lot more. Renting prices do go up over time. This sucks if one wants to be in one place long term.

- There aren't enough homes out there. And, in many locations there are not enough people to build them. A lack of skilled trades to do the work. This drives up home prices because of supply/demand.

- I know financial people who say NOT to treat your primary home as an investment. It's something you aren't really going to be able to leverage while your thriving in life.

And so much more...

Re: Maybe treating housing as an investment was a mistake

#77

Post by wellthisisgreat »

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…

> Tanking housing prices would destroy their trust in the system that they bet everything on.

rip the bandaid and cut the losses. The house as investment is the blight on modern society

Re: Maybe treating housing as an investment was a mistake

#78

Post by tablespoon »

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…

> 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 house is the single biggest investment they will ever make in their life. You'd be destroying everyone's retirement plans and there'd be major economic repercussions.

I wonder if one way out would be to 1) build government rental-housing projects again, to fill the immediate housing need, and 2) implement other policies to increase home-building (but only enough to keep price increases below inflation).

One serious problem would be the association of housing projects with crime and poverty, but maybe that could be addressed by putting police stations on the first floor (or something) and eminent-domaining them into upscale areas over luxury housing.

Re: Maybe treating housing as an investment was a mistake

#79

Post by joshocar »

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…

In general, chefs, and anyone who works in the kitchen, are severally underpaid for the skill and amount of work the job takes. It's long hours in a hot, cramped, very high stress environment for peanuts. Not to mention the terrible hours. I have a very brief stint in the food industry when I was a kid and it was enough for me to say I would never do it as a career.

Re: Maybe treating housing as an investment was a mistake

#80

Post by baloki »

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?

I assume it’s more people who’ve bought a house, sell it to downsize once the kids have moved out and use the excess towards their retirement (to make up the difference between the low amount they’ve been able to scrape together over the years)
Post reply on HN