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

Re: Maybe treating housing as an investment was a mistake

#161

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

nemothekid wrote: post #119

zachthewf wrote: post #69

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…

This is a technical solution to a political problem. The cost of building housing isn't the problem. As the article complains, the problem is housing is an investment and as other commenters have pointed out, our government has pretty much protected this asset class and all of America has the expectation that pricing will continue to go up. If you flood the market with competitive homes you will destroy housing at an…

In some sense I agree with you, and it would all be much simpler if the laws could be changed. But I think this is pretty unlikely at least in the next 30 years or so.

But sufficiently cheap/fast technology is very difficult to block. Not sure if there's any actual way housing could get there (would have to be some sort of modular assembled-on-site sort of thing).

Re: Maybe treating housing as an investment was a mistake

#162

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

SoftTalker wrote: post #113

dfxm12 wrote: post #58

Earlier quoted context omitted.

What sucks is a lot of young renters with steady jobs can afford to pay off a mortgage month to month, but they just can't afford that down payment (especially the 20% needed so as to not need to get mortgage insurance)! I was in that position for a while. Every time it seemed like I could afford to put that money down, the housing prices went up! It took a handful of years of renting cheap places (with roommates), l…

That’s normal. I bought my first house in the early 1990s. Saving the down payment was tough. I lived in a real shithole apartment, anything nice and the rent ate up too much of my cash flow. And I I had to pay PMI, but the monthly payment was still cheaper than rent.

I too went for a down payment below 20% (somewhere closer to 5%) because saving up a full 20% would've been daunting to say the least, and as such pay PMI. Still a better deal than renting by a large margin, and the feeling that the cash being put into payments is going towards owning something rather than being set aflame is nice.

That said I agree with the sibling comments that 20% down payments shouldn't be as out of reach to as many people as they are. Housing prices are ridiculous.

Re: Maybe treating housing as an investment was a mistake

#163

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

SoftTalker wrote: post #113

dfxm12 wrote: post #58

Earlier quoted context omitted.

What sucks is a lot of young renters with steady jobs can afford to pay off a mortgage month to month, but they just can't afford that down payment (especially the 20% needed so as to not need to get mortgage insurance)! I was in that position for a while. Every time it seemed like I could afford to put that money down, the housing prices went up! It took a handful of years of renting cheap places (with roommates), l…

That’s normal. I bought my first house in the early 1990s. Saving the down payment was tough. I lived in a real shithole apartment, anything nice and the rent ate up too much of my cash flow. And I I had to pay PMI, but the monthly payment was still cheaper than rent.

> I bought my first house in the early 1990s. Saving the down payment was tough.

Compare housing prices since 1990 vs. wage growth over the same period. For the overwhelming majority of people entering the workforce today, there is no way to realistically save for a down payment unless you forego saving for anything else - no 401k, no IRA, no emergency fund, no car, no family.

Re: Maybe treating housing as an investment was a mistake

#164

Post by troll555 » Mon, Mar 06, 2023, 5:38 PM UTC

photon12 wrote: post #125

tempsy wrote: post #107

Earlier quoted context omitted.

This is an absurd statement. Median rent in Seattle for a 1 bedroom is $2k. Using the 40x rule someone who makes $80k could easily afford this, which is a low bar for someone with a moderately decent job. Locking in a low rate alone has nothing to do with whether owning is more affordable than renting. The rate could be 0% but with a sales price high ala 2021-2022 buying mania and then adding property taxes, insuranc…

> $80k could easily afford this, which is a low bar for someone with a moderately decent job. $80k is not a low bar, and this is insulting to really talented people I know stuck in below $40k jobs.

[dead]

Re: Maybe treating housing as an investment was a mistake

#165

Post by Muromec » Mon, Mar 06, 2023, 5:39 PM UTC

dfxm12 wrote: post #58

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…

What sucks is a lot of young renters with steady jobs can afford to pay off a mortgage month to month, but they just can't afford that down payment (especially the 20% needed so as to not need to get mortgage insurance)! I was in that position for a while. Every time it seemed like I could afford to put that money down, the housing prices went up! It took a handful of years of renting cheap places (with roommates), l…

And here at the bottom of the see, there is no down payment (financing up to 100%), but young renters still can't get the a mortage of the same monthly amount as they pay rent, because of regulatory reasons -- mortage ceiling is defined as something like 5x gross yearly salary.

Somehow it's fine to pay half the salary in rent, but not fine if it's financing the mortage.

Re: Maybe treating housing as an investment was a mistake

#166

Post by ska » Mon, Mar 06, 2023, 5:39 PM UTC

highwaylights wrote: post #140

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…

This astonishes me about the US real estate market and is something I was only educated to on HN in the last week or so. I had absolutely no idea that 30 year fixed mortgages were not only widely available but the common standard there.

I can't think of another country that has anything like it, and it's largely because of the government market interference (via Fannie/Freddy especially)

It's going to continue to have some weird knock on effects.

Re: Maybe treating housing as an investment was a mistake

#167

Post by throwway120385 » Mon, Mar 06, 2023, 5:39 PM UTC

bedhead wrote: post #95

I've been screaming about the OpenDoor's and RedfinNow's of the world for several years. These are in effect payday lenders for homes, dangling low all-cash offers to entice desperate sellers to hit the bid quickly. Ironically, these companies manage to lose money anyway, perhaps yet another sign that SFH's weren't meant for this. Incredible that even after 2008, we have yet to really learn that the financialization…

Yeah these scumbags constantly text you and send you fake handwritten letters about your house to try to entice you to talk to them. My partner and I were getting A LOT more of them when interest rates were low. She took a "course" once on flipping houses when she was younger and honestly the whole idea of flipping is scumbag central, with "wholesalers" and "lead generators" whose whole business model is to convince people to sell for less than they could get in a proper real-estate transaction.

Basically the course boiled down to "find some rich relatives to con for investment money" and "look around your neighborhood for old people or people who just lost their job and give them lowball offers."

Re: Maybe treating housing as an investment was a mistake

#168

Post by turndown » Mon, Mar 06, 2023, 5:39 PM UTC

SoftTalker wrote: post #113

dfxm12 wrote: post #58

Earlier quoted context omitted.

What sucks is a lot of young renters with steady jobs can afford to pay off a mortgage month to month, but they just can't afford that down payment (especially the 20% needed so as to not need to get mortgage insurance)! I was in that position for a while. Every time it seemed like I could afford to put that money down, the housing prices went up! It took a handful of years of renting cheap places (with roommates), l…

That’s normal. I bought my first house in the early 1990s. Saving the down payment was tough. I lived in a real shithole apartment, anything nice and the rent ate up too much of my cash flow. And I I had to pay PMI, but the monthly payment was still cheaper than rent.

Thank God things were done terribly back then too, or else you'd agree with progress!

Re: Maybe treating housing as an investment was a mistake

#169

Post by ep103 » Mon, Mar 06, 2023, 5:39 PM UTC

hinkley wrote: post #53

ep103 wrote: post #21

Earlier quoted context omitted.

My rent for my cockroach invested, 150 sq ft apartment is larger than my parent's mortgage for their suburban McMansion about 45m-1h away, and my rent is absolutely on the cheap side for a 1bd room in the area.

In Seattle, 45 minutes away is still within the city limits, unless you're right on the edge of the city limits to start with. And if it's toward Everett even that doesn't save you. In traffic I often thought about how when I was a kid we got uprooted to a new school at a bad time to save my dad 45 minutes of commute each way, and how 2 hours a day doesn't sound that awful.

Yeah, its 45 without traffic, 1h-1:10 on a normal day, 1.5h during the morning and evening commutes. So they're solidly outside the city radius.

The thing is, before I moved in, I did research on 1bdroom apartments within a large radius of the city.

And basically, unless I was willing to move to a very unsafe area or very unsafe or clearly problematic apartment, rents simply do not go beneath my current rent price.

There seems to be an agreed upon price floor from all landlords, and the only thing that changes as you get further from the city center is the size and quality of the apartment.

But that means literally every apartment in about an hour circle of my location is more than my parent's mortgage. At least the roaches and I don't have major commuting costs as well.

Re: Maybe treating housing as an investment was a mistake

#170

Post by __derek__ » Mon, Mar 06, 2023, 5:39 PM UTC

czbond wrote: post #83

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.

Will GPT-6 replace a plumber? I think not. Will GPT-6 replace some subset 10..80% of engineering, law, medical hours? absolutely

Wait, why 6?