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

Re: Maybe treating housing as an investment was a mistake

#301

Post by fxtentacle » Mon, Mar 06, 2023, 6:00 PM UTC

e40 wrote: post #276

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…

Yeah, my mortgage is $800 for a 2,000 sq ft house and my son's rent for 1/2 of a 1 bdrm apt is $1700. The situation is completely out of control. (We're both in CA.)

For comparison, in northern Germany one can rent a 1000 sq ft house + 1000 sq ft garden in walking distance from offices, supermarkets, restaurants, etc. for about $1000 cold per month.

Sounds like CA is 5x more expensive for young people. But salaries are "only" 2x to 3x those of Germany.

Re: Maybe treating housing as an investment was a mistake

#302

Post by throwswaydollar » Mon, Mar 06, 2023, 6:00 PM UTC

vondur wrote: post #248

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…

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 thin…

Maybe wallstreet is trying their luck again

Re: Maybe treating housing as an investment was a mistake

#303

Post by danuker » Mon, Mar 06, 2023, 6:00 PM UTC

sgt101 wrote: post #67

last_responder wrote: post #30

Earlier quoted context omitted.

>You'd be destroying everyone's retirement plans Everyone?

yes I agree. I was always told, and believed "a house is for living in, not an investment". It figures in my retirement plans in the sense of not having to pay rent on my house as I will own it. That is really positive because it also means not having to pay tax on the money that I would have to have to pay rent. But I bought it because I wanted to own it and live in it, not to sell and make money off. Having said th…

> when it unwinds

Don't underestimate the inflationary potential of fiat currency. Maybe it'll just stay the same price, but everything else still gets relatively more expensive.

Re: Maybe treating housing as an investment was a mistake

#304

Post by bumby » Mon, Mar 06, 2023, 6:01 PM UTC

rs999gti wrote: post #288

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…

> but they just can't afford that down payment (especially the 20% needed so as to not need to get mortgage insurance) Mortgage insurance is not a bad thing. But the FHA loans in the US solves the 20% issue by only requiring 3.5% down.

I think their point was that the additional cost of insurance may skew the affordability

Re: Maybe treating housing as an investment was a mistake

#305

Post by jjoonathan » Mon, Mar 06, 2023, 6:01 PM UTC

benlivengood wrote: post #201

rcme wrote: post #12

Buying a house is an investment. You're making a bet that worker productivity will improve near you. After all, what is the value of land? Some land can be farmed or house a factory. But usually, when we talk about residential real estate, we're talking about land that houses workers. So, the value of that land is directly proportional to the economic value those workers can provide. We refer to "economic value provi…

This is one of the key points the article didn't make; the structures depreciate and the land (for the most part) appreciates because we have positive population and economic growth. Urban areas experience an increase in population density with population and economic growth and this drives the higher demand for land. Most likely the way to control individual housing costs is systematically lowering the cost of build…

Everyone feels entitled to a bailout for their bad investment, lol.

Re: Maybe treating housing as an investment was a mistake

#306

Post by chadlavi » Mon, Mar 06, 2023, 6:01 PM UTC

whiddershins wrote: post #285

chadlavi wrote: post #211

[flagged]

First time homeowners have many special loan options available to them, which you might be aware of if you weren't directing your thoughts towards threats of violence against millions of people.

ah yes, my errant comment on the internet is the cause of my woes, thanks mate, cheers

Re: Maybe treating housing as an investment was a mistake

#307

Post by TheBigSalad » Mon, Mar 06, 2023, 6:01 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…

It already works something like that.

Re: Maybe treating housing as an investment was a mistake

#308

Post by cjmb » Mon, Mar 06, 2023, 6:01 PM UTC

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…

Agreed. Don't forget the massive implosion of the real estate market 30 years ago that turned a whole generation off of buying property and bankrupted vast swathes of the population.

Said "breathless articles" usually just grab some "rate of price increase" chart benchmarked to the most severe recession in recent decades and start celebrating just because Tokyo also has good housing policy. But in trying to advocate for good policy elsewhere, they just end up championing national recession, international stagnation, depressed wage growth, and more.

see charts & data etc here: https://www.conradbastable.com/essays/japans-housing-crisis-...

Re: Maybe treating housing as an investment was a mistake

#309

Post by rs999gti » Mon, Mar 06, 2023, 6:01 PM UTC

nemo44x wrote: post #262

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…

Buy a "starter house" and begin to build equity. It's how people have always done it. You buy a really small house that isn't in the most desirable location and start making payments into it. Down the road you have built equity and you can sell your starter home and buy a nicer, larger house. You maybe have some family to support then and need more room. But you see young people renting for 15 years in expensive plac…

I don't know why you are being downvoted. Buying small, building equity, and trading up has always been a thing in home ownership.

Re: Maybe treating housing as an investment was a mistake

#310

Post by DanTheManPR » Mon, Mar 06, 2023, 6:01 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.

But it's not as though property taxes and ongoing maintenance costs don't exist for apartments. The income the owner receives from the rents has to cover all of that.