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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

#461

Post by judge2020 »

gknapp wrote: post #435
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…

I know this is anecdotal, but whenever I hear these stories, I'm curious about the details. A quick search leads me to believe that head chef pay in Seattle typically ranges from about 90k-110k per year. Finding apartments off Broadway in Cap Hill, I can see that studios, though relatively expensive, range around $1.5-2k a month. An income tax calculator estimates about a 22% total tax bracket and a monthly adjusted…

It also matters where and how far you are from things. Walkability is a big draw, so if you're within a mile of a major district with tons of food, entertainment, and culture, chances are any well-kept apartment building will raise their prices to account for that (and account for you not having a monthly car payment or auto insurance payment), and if this chef is within a few blocks of their work, it's not hard to believe their rent could be over 3,000 a month or 50%+ of their income (although, typically, management companies want to see your gross income be 3x or more of the rent).

Re: Maybe treating housing as an investment was a mistake

#462

Post by smallerfish »

billiam wrote: post #334
smallerfish wrote: post #256

Earlier quoted context omitted.

I did an FHA loan on my first house 15 years ago, and the down payment was peanuts. Unless you have a poor FICO or your debt ratio is high, you probably qualify. https://www.fha.com/fha_loan_requirements

I don't think you got the point of this article. Maybe read it again?

I was replying to the parent who said that getting a 20% down payment is a big obstacle. Maybe read the comment in context of the discussion again?

Re: Maybe treating housing as an investment was a mistake

#463

Post by parineum »

arcticbull wrote: post #11
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.

Federalized zoning rules. Congress has the authority. https://fred.stlouisfed.org/series/JPNCPIHOUAINMEI

One size fits all zoning regulations for rural Montana, Manhattan and the suburbs of Los Angeles.

Re: Maybe treating housing as an investment was a mistake

#464

Post by greenie_beans »

convolvatron wrote: post #429
greenie_beans wrote: post #347

Earlier quoted context omitted.

this is true, but it doesn't make it right.

this is not even true. i've witnessed plenty of very highly paid people who actively undermine the organizations paying them

you're right, though it's a prevailing truth in economics, and thus whatever bullshit they come up with influences how markets work, it's true.

Re: Maybe treating housing as an investment was a mistake

#465

Post by t-writescode »

gknapp wrote: post #435
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…

I know this is anecdotal, but whenever I hear these stories, I'm curious about the details. A quick search leads me to believe that head chef pay in Seattle typically ranges from about 90k-110k per year. Finding apartments off Broadway in Cap Hill, I can see that studios, though relatively expensive, range around $1.5-2k a month. An income tax calculator estimates about a 22% total tax bracket and a monthly adjusted…

  * They're a head-chef, that seems like a high-ranking position.
  * That used to feed and house a whole family, easily.
  * They can now **only afford a studio**

Re: Maybe treating housing as an investment was a mistake

#466

Post by Nanana909 »

mjr00 wrote: post #118
andrewmutz wrote: post #62

Earlier quoted context omitted.

> You'd be destroying everyone's retirement plans and there'd be major economic repercussions I think that exaggerates it. Most retirees aren't profiting from the home they own if they live in it. The "income" from it is just imputed rent. So if the housing supply increases dramatically, that imputed rent drops, but it doesn't matter since the cost of housing drops as well.

Many (most?) retirement plans involve downsizing from the large home in a (sub)urban area where they raised children and worked for most of their life to a lower-cost area in a lower-cost house. If my SFH is worth $1,000,000 and my retirement plan involves selling and moving to a $500,000 condo, that's $500,000 of money in my retirement account. If politicians implemented a policy that slashed housing prices in half,…

Most people are not downsizing by such massive amounts though. The median home price is only $470kish and people aren’t going to accept massive quality of life drop..I.e. very few people are selling $470k homes to buy $150k homes. Thus the gains will be much smaller..

and with a $1M house should have a sizeable 401k specifically so they’re not relying literally on the housing market to retire. Any number of events could cause the same scenario you mentioned.. so I’m pretty much any realistic scenario for most people, tax deferred investments dwarf the small boost you get from buying a slightly cheaper house.

And having more $250k houses now means it’s easier for everyone else to build up a retirement plan.

Re: Maybe treating housing as an investment was a mistake

#467

Post by sircastor »

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…

I had a coworker whose previous career had been as a pastry chef. She worked at a hotel and told me that she'd topped out for income and it was somewhere around $50k/year. After learning to program (and I think she did a boot camp in the earlier days) she started programming. She now programs (not, I think in the finance part of the company though) for an investment firm you've heard of. She is easily past 6 figures.

Re: Maybe treating housing as an investment was a mistake

#468

Post by varispeed »

This and also commercial property that is unaffordable for small business. Imagine you have an idea you want to develop - you already need to commit a substantial sum of money to rent a workshop. It used to be that you could do stuff in your parents' garage, but nobody can afford such a luxury today.

Then you have corporations setting up so called maker spaces, which the real reason for them is to steal ideas from people who can't develop them themselves.

The idea is that even if you come up with great idea you could never make more money than from regular employment.

Big corporations have been lobbying for these for years, so that it is ensured by the system that competition never grows without control of big corporation, investment fund or banks and that the entrance to the wealth club is closed.

Re: Maybe treating housing as an investment was a mistake

#469

Post by smallerfish »

loeg wrote: post #444
smallerfish wrote: post #256

Earlier quoted context omitted.

I did an FHA loan on my first house 15 years ago, and the down payment was peanuts. Unless you have a poor FICO or your debt ratio is high, you probably qualify. https://www.fha.com/fha_loan_requirements

You may still need 3.5% down, and there are income limits on the FHA program. It doesn't fix the problems with high housing prices, either.

3.5% down is not ridiculous if you are being realistic about what you can afford as a first time purchase (and certainly better than 20%).

And as for income: https://www.nerdwallet.com/article/mortgages/fha-loan-requir...

Re: Maybe treating housing as an investment was a mistake

#470

Post by lukeschlather »

gknapp wrote: post #435
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…

I know this is anecdotal, but whenever I hear these stories, I'm curious about the details. A quick search leads me to believe that head chef pay in Seattle typically ranges from about 90k-110k per year. Finding apartments off Broadway in Cap Hill, I can see that studios, though relatively expensive, range around $1.5-2k a month. An income tax calculator estimates about a 22% total tax bracket and a monthly adjusted…

In a well-functioning city, a head chef should be able to comfortably afford to rent a 2-3 bedroom apartment within walking distance of their restaurant. They should not be spending 1/3rd of their income and only getting a studio out of it.
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