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Maybe treating housing as an investment was a mistake

goodreason.substack.com

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Re: Maybe treating housing as an investment was a mistake

#171

Post by WaitWaitWha »

For me, there are two differences between Alice and I, how we think about rent v buy.

She is looking at national details. Real-estate prices are very much localized in my experience. I can have a property that is plummeting in value, while a neighborhood just on the other side of the main road is nicely increasing in value.

To me if I sell for no profit at the time the house is sold, I won. If I pay rent X every month, I will never get that rent back. If I pay the same X amount on a mortgage, even if I get half of it back, that is a gain of 50% over rent.

Re: Maybe treating housing as an investment was a mistake

#172

Post by squokko »

dheera wrote: post #122
sclarisse wrote: post #90

Earlier quoted context omitted.

Who exactly is being “shafted” by occupying $100,000 worth of house/land, that has not otherwise been paid for, for $216 a month? That’s a great rate.

No, that's not a great rate. It's only "$100K worth" because some other rich bums have collectively occupied and bought multiple houses that they don't live in and increased the price of land, AND lobbied for no more housing to be built to artifically keep the market price high. They treat housing as an investment, rather than a dwelling, which is exactly what's being discussed here. It's ridiculous that 99%+ of peop…

If you look at places in America where land is effectively free, a quality house will still cost you $100K minimum. It's not just land rent-seeking, housing structures cost money.

Re: Maybe treating housing as an investment was a mistake

#173

Post by xapata »

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'm an economist, yet I only recently realized that adjustable-rate mortgages are economists' consensus best choice for consumers. Based on the expectation that personal economics are well-correlated with broad market economics, and that interest rates will decline when the economy struggles.

Re: Maybe treating housing as an investment was a mistake

#175

Post by highwaylights »

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…

Tax on non-primary properties solves this if you can get it past vested interests.

Reasonable tax breaks for your primary or only home, and none for second homes / investments you let out.

That gives a valve to perform qualitative easing on the housing market whenever you need to, and is not uncommon in other parts of the world.

EDIT: Having read the responses below I’ve realised I didn’t clearly word what I meant here, that’s my bad. I mean a holding taxation rather than CGT. Essentially, an elevated annual property tax on non-primary properties that would have the effect of penalising investors relative to those seeking a home to live in.

Re: Maybe treating housing as an investment was a mistake

#176

Post by lotsofpulp »

anonymouskimmer wrote: post #88
voisin wrote: post #68

Earlier quoted context omitted.

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

I don't know. An unclogged pipe is used multiple times per day.

If plumbers can figure out how to sell flushing as a service, this whole disparity can be resolved. They might need to hire a software engineer though.

Re: Maybe treating housing as an investment was a mistake

#177

Post by goosedragons »

kurthr wrote: post #92
VHRanger wrote: post #7

Earlier quoted context omitted.

Japan has plenty of societal ills, but at least Tokyo has been doing amazing on this front.

Every time I see this I have to laugh. If you live in Tokyo, I'd love to hear your anecdotal experience. I have stayed and visited japan for the last 35 years, and find all of the "Tokyo is so affordable and buildable" is hilarious. The breathless articles I read about it leave out fundamental aspects (the incredible density, the absolute destruction 70 years ago, the corruption [especially in Shinjuku], the size of…

So why is the population of Tokyo steadily increasing while the population of Japan overall is decreasing? Is it all just foreigners explaining 2+% growth rate in recent years despite them making up less than 3% of the cities total population? Or are the people stuck in 100 year mortgages just having lots more kids than everybody else?

Re: Maybe treating housing as an investment was a mistake

#178

Post by uoaei »

tempsy wrote: post #107
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 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…

This take is an example of a phenomenon I've come to describe as "stat-rot".

Completely missing the point about how people live because of a hyper-focus on median statistics. By definition, the median describes exactly one person to perfect resolution, and the rest of the population only in a binary higher/lower relation. The explanatory power of median statistics is marginally better than mean statistics, but it is not a substitute for and cannot serve to explain outcomes that do not fit the restrictive mold of the "median" person.

Re: Maybe treating housing as an investment was a mistake

#179

Post by Lich »

recursivedoubts wrote: post #41

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 t…

> 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.

Exactly my thoughts as well and I am in the same situation too (homeowner + kids). I don't want it to happen given the probable turmoil and violence that will come along with it, but at this point I feel like it's the only thing that will bring change.

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