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

Re: Maybe treating housing as an investment was a mistake

#151

Post by tgv » Mon, Mar 06, 2023, 5:37 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

Not where I live. Housing prices have exploded, like everywhere else, but it's not people's retirement plan. We've got state and employer pensions (from a fund not owned by the employer).

So it's not that. Look elsewhere. E.g. at AirBnB, and at ridiculous (both low and high) salaries.

Re: Maybe treating housing as an investment was a mistake

#152

Post by luckylion » Mon, Mar 06, 2023, 5:37 PM UTC

eloisant wrote: post #91

andrewmutz wrote: post #62

Earlier quoted context omitted.

> 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.

The problem isn't retirees who paid out their house already, it's the households who still have a big mortgage on their house.

What would change for them? They still need to pay that down in either case, don't they?

Granted, they can sell at some point and make a 3x their investment. But by then, buying another house will also be 3x, and rent will be 5x, so they're kind of back where they started.

Re: Maybe treating housing as an investment was a mistake

#153

Post by haberman » Mon, Mar 06, 2023, 5:37 PM UTC

Articles like this frequently assume that if new housing can be built, the value of existing housing will go down. Is there data to support this?

Supply and demand is of course a real and powerful force, however if you tear down a single family house and build something more dense in its place, then you can build many units where there used to be only one. My intuition is that the cost of existing houses would not take such a big hit (and might even continue to appreciate), because existing houses have more land and thus more potential to build multiple units within that footprint.

Re: Maybe treating housing as an investment was a mistake

#154

Post by giantg2 » Mon, Mar 06, 2023, 5:37 PM UTC

lotsofpulp wrote: post #20

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…

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.

The contradictory part is likely that they were raised, like most, on the idea of this being a meritocracy. The harder you work and the better you are at something the more you should get paid. But of course that's not how the world works.

Re: Maybe treating housing as an investment was a mistake

#155

Post by carlosjobim » Mon, Mar 06, 2023, 5:38 PM UTC

lotsofpulp wrote: post #20

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…

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.

Supply and demand is created by the rulers when they create the money supply. Their decision for the past decades has been that money should be created by real estate mortgages and thus there has been an immense shift of wealth to the elderly and real estate owners. Being head chef in a successful restaurant is an incredibly hard skill, but with financial consequences such as the poster you're replying to. Borrowing money at the right time and doing absolutely nothing or the bare minimum has had a much better return than working hard and becoming the best of your trade. That's why so many are dropping out of the regular work force and entire industries are collapsing right now. Is that sustainable in the long run? Are we all to sit on our asses, borrow more money and wait for inflation of real estate value to pay for us? Because, that has clearly been the most successful career as long as I remember.

Re: Maybe treating housing as an investment was a mistake

#156

Post by lotsofpulp » Mon, Mar 06, 2023, 5:38 PM UTC

giraffe_lady wrote: post #110

photon12 wrote: post #38

Earlier quoted context omitted.

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.

Everyone trying to convince you to be ok with this but no, you have seen it correctly and it is wrong. People can work themselves to death doing jobs that benefit us, and what they receive for it is misery and precarity. Trust your own judgement and don't accept this as a natural, inevitable, or just state.

Then how do you allocate who gets to live in a highly desirable place like Seattle?

Re: Maybe treating housing as an investment was a mistake

#157

Post by rcme » Mon, Mar 06, 2023, 5:38 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…

> This is pretty much the crux of it. High housing prices could be "fixed" almost overnight

This is a crazy thing to state with almost no justification. How could housing prices be fixed overnight? Please don't say "zoning changes." Plenty of places without zoning issues have really expensive real estate.

Re: Maybe treating housing as an investment was a mistake

#158

Post by jb12 » Mon, Mar 06, 2023, 5:38 PM UTC

lalos wrote: post #116

Easily fixed with a tax system: 1) first home tax-free - the address you submit your yearly taxes on. Incentivize people to own at least one home. 2) second property you pay taxes for both homes now - no more tax free benefit since you are able to afford more than one place. 3) more than 2 properties you pay taxes for all of them times some factor 0.05*N houses. Fudge around with the factor to allow more supply for a…

I buy one house, my wife buys one house, we set up one trust each for two of our kids to own one house, we get four houses tax free

Re: Maybe treating housing as an investment was a mistake

#159

Post by latchkey » Mon, Mar 06, 2023, 5:38 PM UTC

jvanderbot wrote: post #136

I've never understood buying a house for the investment. I bought one because I love the location, love the house, have a propensity for doing things that landlords don't like, and _really_ hate moving. The rentals around here are junk.

You invested in yourself, nothing wrong with that at all. =)

Re: Maybe treating housing as an investment was a mistake

#160

Post by 88913527 » Mon, Mar 06, 2023, 5:38 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…

How is it exactly a retirement plan if your house goes up 200% over N years, but so do all of your neighbor's homes? You aren't changing your relative position to them.