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

Re: Maybe treating housing as an investment was a mistake

#241

Post by owenmarshall » Mon, Mar 06, 2023, 5:49 PM UTC

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…

I'd agree, it's a structural problem. The mortgage interest deduction is my favorite example. It is a hugely regressive tax break which has been targeted across the political spectrum. Seriously, when was the last time you can remember the Cato Institute agreeing with Barack Obama on tax policy?

But I can't see how it ever goes away: it would definitely increase taxes on voters, so what politician signs up for it? It'll probably turn into a culture war third rail like SALT deductions first.

Re: Maybe treating housing as an investment was a mistake

#242

Post by bacchusracine » Mon, Mar 06, 2023, 5:49 PM UTC

steveBK123 wrote: post #94

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…

To be fair, being a chef has never been a well paying role. Read Bourdain's writing on the NYC restaurant scene in the 90s. Hard work, hard drugs and hard life.

>Hard work, hard drugs and hard life.

Not having read the book I must admit my kneejerk response is to wonder if the latter part could have been avoided by not indulging in the middle part? Not to say that hard work always pays off or anything but drugs are expensive are they not?

Re: Maybe treating housing as an investment was a mistake

#243

Post by jjoonathan » Mon, Mar 06, 2023, 5:49 PM UTC

lbotos wrote: post #100

joshocar wrote: post #79

Earlier quoted context omitted.

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.

Is them being underpaid not a function of buyers not willing to pay more for the goods? I'm not under the impression that most restaurateurs are "raking it in" staff be damned. Sure, at the ultra high end, yes, but for most restaurants a chef pay is function of the market, right?

The easy money is sucked out through real estate, not management.

Re: Maybe treating housing as an investment was a mistake

#244

Post by ImHereToVote » Mon, Mar 06, 2023, 5:49 PM UTC

jb12 wrote: post #158

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

If you register that you live in those different houses but live in the same house. Straight to jail.

Re: Maybe treating housing as an investment was a mistake

#245

Post by BobbyJo » Mon, Mar 06, 2023, 5:50 PM UTC

jedberg wrote: post #195

Muromec wrote: post #165

Earlier quoted context omitted.

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.

That sort of makes sense. When you own a property, you have to maintain it and pay property taxes. When you add all that up, you either need a lot more than rent, or you need the mortgage to be lower than rent so you can afford those other expenses.

100%. If it's an older house, the mortgage might not even be half your costs for the first few years, while you get everything that breaks back in good condition.

Re: Maybe treating housing as an investment was a mistake

#246

Post by lvl102 » Mon, Mar 06, 2023, 5:50 PM UTC

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…

Meanwhile some mainland Chinese 18yo drops in with a bag full of cash to buy a place outright. Something is very wrong with that picture for Americans.

Re: Maybe treating housing as an investment was a mistake

#247

Post by ominous_prime » Mon, Mar 06, 2023, 5:51 PM UTC

WaitWaitWha wrote: post #187

ominous_prime wrote: post #99

Earlier quoted context omitted.

You will be surprised how much good software engineers make in the USA -- still many multiples of most successful plumbers, and without the long-term physical consequences of that type of labor. Yes, there's still going to be better examples to highlight the disparity.

There are no comparable "long-term physical consequences of that type of labor" software engineers do?

Maybe? Anecdotal I guess, but I've met more plumbers with chronic knee and back problems than software engineers. But being a plumber in the US isn't too physically demanding, and makes OK money, so it's probably the example of disparity the GP was trying to highlight.

Re: Maybe treating housing as an investment was a mistake

#248

Post by vondur » Mon, Mar 06, 2023, 5:51 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…

Wasn't that a part of the problem with the real estate meltdown back in 2008? We had people getting into loans with either zero down or far less than 20% paying only the interest and not the principal for the first 5 years. They were told that real estate value only ever increases and they'll be able to refinance the loan and put the new equity into a standard loan. That worked fine until it didn't and the whole thing came crashing down. I thought I saw that 10% down mortgages are more common now, except you will have to pay for PMI until you have enough equity to cover a certain amount of the loan.

Re: Maybe treating housing as an investment was a mistake

#249

Post by uoaei » Mon, Mar 06, 2023, 5:51 PM UTC

nostromo wrote: post #182

uoaei wrote: post #126

Earlier quoted context omitted.

Normative statements don't hold much weight for justifying why things are the way they are.

Downpayments need to be substantial because the owner needs to have skin in the game. Otherwise the borrower could walk away from the house and the mortgage with very little downside.

That's a much better reason, or, at least, something to respond to. Thank you.

Accountability on the part of the prospective owner can be achieved in multiple ways, but using down payments probably minimizes the amount of bureaucracy and following-up in how authorities manage this kind of thing.

Of course, implementing it this way creates "structural inequity", i.e., a process that inherently separates one group into two groups along lines that members of that group have little to no control over. Obviously the property not-having-money is correlated with other factors such as skin color and whether your parents went to college, which creates divisions along lines that are not just economic but socio-economic, and influence the development of not just that person but also everyone who depends on that person, including future generations.

I would be very interested to hear more from systems theorists on other kinds of methods that don't reproduce these kinds of correlated outcomes.

Re: Maybe treating housing as an investment was a mistake

#250

Post by Bostonian » Mon, Mar 06, 2023, 5:51 PM UTC

House prices depend on supply and demand. Housing investors increase the supply of housing and are not the problem but part of the solution. The problem is land-use restrictions, such as limitations on multi-story buildings.