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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

#231

Post by treis »

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…

The solution in the past was for people to move to a different city. Migration is way down compared to generations past and continues to fall:

https://www.pewresearch.org/fact-tank/2021/12/16/in-2020-few...

The change in city living is also a big difference. Cities used to have parts of the city with the lowest cost of living in the metro area. Things like boarding houses and single room apartments w/ shared bathrooms & kitchens. That's no longer the case in a lot of cities. Places like Seattle and SF are comprised of pretty much all expensive places to live. That squeezes poor people more since they often have to rely on public transportation and can't take advantage of cheaper suburban living.

Re: Maybe treating housing as an investment was a mistake

#232

Post by falcolas »

latchkey wrote: post #148
falcolas wrote: post #9

This doesn't even touch on the fact that you will always require housing, so you can never truly liquidate your primary residence. At best, you can borrow against it. At worst, you sell it once and rejoin the rental market.

> At best, you can borrow against it. Borrowing against it is a fantastic idea, what's wrong with that? People really need to learn that their assets can be used to generate additional returns. Otherwise you just have money sitting there, not doing anything. Where is the fun in that?

Nothing's wrong with it, but it's a bit orthogonal as viewing the property itself as an investment. Instead it's acting as guarantee against other investments.

Re: Maybe treating housing as an investment was a mistake

#233

Post by theGnuMe »

FredPret wrote: post #115
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…

First let me say that rent and real estate should go way down and Seattle should make it easier for people like your friend to live there. Second, there is no direct connection between work done, value added + money earned. The connection is a loose correlation at best. As an example, you can do back-breaking labour painstakingly paving roads with one cobblestone at a time, 16 hours a day, for decades. Or you can wri…

I dunno, if that paver got a royalty for ever car that used his road then he would be very rich!

Re: Maybe treating housing as an investment was a mistake

#235

Post by kwhitefoot »

highwaylights wrote: post #175
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 he…

You mean that in the US you don't pay tax on the capital gain when you sell a property that is not your home? It's a great country to be rich in!

Re: Maybe treating housing as an investment was a mistake

#236

Post by bmitc »

highwaylights wrote: post #175
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 he…

I agree with that. Investment homes, second or maybe just third homes, etc. should be taxed rather extremely aggressively.

Re: Maybe treating housing as an investment was a mistake

#237

Post by mitt_romney_12 »

atemerev wrote: post #85
arberx wrote: post #5

That implies housing has risks. Since 2009, that risk has been eliminated by the FED owning 30% of all mortgages on its balance sheet. We've nationalized housing risk and privatized the gains.

And the fed is absolutely, 100% riskless, right? Nothing ever will happen to it?

If the fed goes under then you have far bigger concerns

Re: Maybe treating housing as an investment was a mistake

#238

Post by lordnacho »

spaniard89277 wrote: post #130
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…

[flagged]

Not sure that's a wise thing to suggest. Both in terms of what you can say on a public forum and in terms of whether it would actually be useful.

Re: Maybe treating housing as an investment was a mistake

#239

Post by freitzkriesler2 »

The problem is entirely caused by real estate investors both domestic and foreign who are looking for yield on their investment hot money.

Since NIMBYS want their cities to never change, the solution is to ban or excessively tax multiple unit ownership and only allow new builds to sell units. The problem then solves itself.

Re: Maybe treating housing as an investment was a mistake

#240

Post by Kon-Peki »

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…

> Capitol Hill, Seattle

My cousin owns a mansion in Capitol Hill. Because she was a broke-ass student at UW and couldn't afford rent. Back in the 1980s, buying a house there was seen as a crazy, insanely risky thing to do and likely to end up in death.

The modern equivalent is the area around 105th and Euclid in Cleveland, near Case Western and the Cleveland Clinic. 150 years ago, that was the wealthiest neighborhood in the entire United States, now you are though to be insane to want to buy a house there. But if you did, would you end up with Capitol-Hill like appreciation in 40 years???

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